Design Linked Incentive (DLI) Scheme

What is the Design Linked Incentive (DLI) Scheme?

The Design Linked Incentive (DLI) Scheme is a central industry incentive run by the Ministry of Electronics and Information Technology (MeitY) under the Semicon India Programme. The DLI Scheme was notified in the Gazette of India on 21 December 2021 and supports Indian firms that design semiconductor chips rather than firms that merely assemble or import them.

According to the chips-dli.gov.in portal, the DLI Scheme offers financial incentives and design infrastructure support across the full semiconductor design lifecycle: Integrated Circuits (ICs), chipsets, Systems on Chip (SoCs), complete systems and IP cores. The scheme is implemented by C-DAC, a scientific society under MeitY, which acts as the nodal agency and operates the India Chip Centre.

Key objectives of the DLI Scheme

• Build a domestic, fabless semiconductor design industry owned by Indian citizens.
• Reduce dependence on imported semiconductor IP by funding indigenous designs.
• Give small design teams access to Electronic Design Automation tools that cost far more than a startup can afford on its own.
• Move Indian designs from tape-out to actual deployment in commercial electronic products.

Main features

• Three components: Chip Design Infrastructure Support, Product Design Linked Incentive and Deployment Linked Incentive.
• Payments are made by C-DAC on a reimbursement basis after verifying milestones, not as an upfront grant.
• The scheme has an operational horizon of five years, with the initial application window opened from 1 January 2022.
• According to MeitY, 23 chip-design projects have been sanctioned and 72 companies have been given access to industry-standard EDA tools.

Who is eligible for the DLI Scheme?

An entity can apply if:

• It is a domestic company, a startup recognised by DPIIT under the 2019 notification, or an MSME registered under the 2020 MSME notification.
• More than 50% of its capital is beneficially owned by resident Indian citizens, in line with the FDI Policy Circular.
• It is working on semiconductor design: ICs, chipsets, SoCs, systems or IP cores, and can submit a Detailed Project Report with clear milestones.
• It commits to retaining domestic ownership status for three years after claiming incentives.

Who cannot apply:

• Individual citizens cannot apply. The DLI Scheme is an industry incentive. There is no application route for a student, engineer, researcher or job seeker to receive money in a personal capacity.
• Companies where 50% or less of the capital is beneficially owned by resident Indian citizens are not eligible.
• Entities that only assemble, trade or import chips without carrying out design work in India are not eligible.
• Products that are purely software, with no semiconductor design content, are outside the scope of the scheme.

Colleges and individual researchers who want personal support for chip design should instead look at the Chips to Startup (C2S) programme of MeitY, which works through academic institutions, not at the DLI Scheme.

What documents are required for the DLI Scheme?

How to apply for the DLI Scheme online

1. Open the DLI portal at chips-dli.gov.in and register the applicant entity with its corporate identity number, PAN and authorised signatory details.
2. Pay the Rs 10,000 registration fee online; the applicant bears the payment gateway transaction charges, and the receipt must be retained.
3. Fill the online application with company details, shareholding pattern proving more than 50% resident Indian beneficial ownership, and the design category being proposed.
4. Upload the Detailed Project Report (DPR) setting out the chip or IP core being designed, the technology node, the project milestones, the budget and the intended deployment in electronic products.
5. Upload the certificate of incorporation, audited financial statements and, if applicable, DPIIT startup recognition or Udyam registration.
6. Submit the application. C-DAC screens it, and shortlisted applicants present their proposal before the evaluation committee constituted by MeitY.
7. On approval, sign the agreement with C-DAC and start drawing design infrastructure support, EDA tools, IP cores and MPW prototyping — through the India Chip Centre.
8. Claim the Product Design Linked Incentive against verified expenditure at each milestone, and later the Deployment Linked Incentive against audited net sales once the design ships in a product.

Applications open in rounds. The portal shows whether a round is currently open; at times the application status is displayed as closed between rounds.

How much benefit does the DLI Scheme provide?

The DLI Scheme has three distinct benefit streams.

1. Chip Design Infrastructure Support. C-DAC's India Chip Centre gives approved applicants access to Electronic Design Automation tools, semiconductor IP repositories, Multi Project Wafer prototyping runs and post-silicon validation support. This is provided in kind rather than as cash.

2. Product Design Linked Incentive (PDLI). Reimbursement of up to 50% of eligible expenditure, subject to a ceiling of Rs 15 crore per application. Eligible expenditure covers the cost of designing the IC, chipset, SoC, system or IP core.

3. Deployment Linked Incentive (DLI). An incentive of 6% to 4% of net sales turnover over five years, subject to a ceiling of Rs 30 crore per application, payable once the semiconductor design is deployed in electronic products sold commercially.

The maximum an approved applicant can draw across the incentive components is therefore Rs 15 crore plus Rs 30 crore per application, and all payments are made by C-DAC only after verifying eligibility and milestone achievement.

What has the DLI Scheme achieved so far?

According to MeitY, 23 chip-design projects have been sanctioned under the DLI Scheme, led by domestic startups and MSMEs building indigenous chips and SoC solutions for surveillance, energy measurement, microprocessor IPs and networking. Seventy-two companies have been given access to industry-standard EDA tools. MeitY has also reported 16 tape-outs, 6 ASIC chips and more than 1,000 engineers engaged on DLI-supported projects, with over 120 companies approved as beneficiaries across rounds.

Common reasons DLI applications are rejected

• Ownership test failed; resident Indian beneficial ownership is 50% or less on the date of application.
• No genuine design content, the proposal covers board-level integration or assembly rather than semiconductor design.
• Weak Detailed Project Report, vague milestones, no technology node, no credible deployment plan or unsupported cost estimates.
• Product already commercially mature, leaving nothing for the incentive to de-risk.
• Incomplete submission, missing audited accounts, missing fee receipt or missing shareholding proof.
• Applied as an individual, which the scheme does not permit.

Help and grievance redressal for the DLI Scheme

• C-DAC DLI support: +91-120-2210800 (Ext 721)
• Email: support.chips-dli@cdac.in and pmudli@cdac.in
• India Semiconductor Mission: ism-dic@gov.in, 16th Floor, B-Wing, IFCI Tower, 61 Nehru Place, New Delhi 110019

The only fee payable to the government under the DLI Scheme is the Rs 10,000 registration fee paid on chips-dli.gov.in. No agent can guarantee sanction of an incentive, and all approvals are made by the evaluation committee constituted by MeitY.