New Delhi: After the Production Linked Incentive (PLI) scheme helped India become the world’s second-largest smartphone exporter, the government is now hoping for a similar success with the Design Linked Incentive (DLI) scheme. On August 23, the government said it had sanctioned 23 chip design projects under the scheme. One of these is Vervesemi Microelectronics, a semiconductor designing and testing firm that outsources manufacturing of these chips.
The company aims to use the funds to develop a portfolio of integrated circuits (ICs) for use in electronics, small motors, EVs, drones, industrial automation and avionics. The other companies approved for the scheme include Tejas Networks subsidiary Saankhya Labs, Kanpur-based startup QuantumShift and IISc-incubated Morphing Machines. Out of the total Rs.65,000 crore allocated, the government has already approved Rs.62,900 crore, leaving the rest for a few small projects.
Currently, India accounts for about 20% of the semiconductor design industry, with almost 35,000 engineers working in R&D labs by leading semiconductor firms like AMD, Micron Tech, Samsung Semiconductor and Broadcom using India’s vast pool of skilled talent to design chips for global use cases.
Catching up before it’s too late
Though most of these companies have integrated India into their supply chains, we are just contributing under 30% to the $445 billion global semiconductor manufacturing industry, where most of the manufacturing through fabs is done by Taiwan, South Korea and the US.
The Ministry of Electronics and Information Technology (MeitY) has also encouraged companies to set up fabs in India through its Semicon India mission, where companies like Micron, HCL-Foxconn and Tata Semiconductor are using the government’s 50% capex grant to significantly lower the risks for their investments. India currently manufactures less than 1% of the semiconductors globally, but accounts for about 6.5% of the semiconductor demand globally.
To further its efforts, the MeitY is launching the Semiconductor Mission 2.0, where it aims to expand the incentives, grants and support it provides to further boost semiconductor manufacturing.
“With ISM 2.0, we’re looking to revamp our design-linked incentive scheme, for which we’re looking at a number of suggestions,” S. Krishnan, secretary in the Ministry of Electronics and Information Technology (MeitY) said. “There’s been a request from the industry to give it wider coverage—to make more risk capital available. These issues are being addressed as part of our revamp of the scheme.”
The industry is keenly awaiting the Semicon India 2025 event, to be held at Yashobhoomi in New Delhi between September 2-4, where PM Modi will interact with delegates from leading companies like ASML, IBM, Micron, Sandisk, SK Hynix and Tokyo Electron.
To date, the government has approved 10 semiconductor manufacturing projects worth Rs.1.60 lakh crore in Gujarat, Uttar Pradesh, Punjab, Andhra Pradesh, Odisha and Assam, with the first commercially made chips to be available by the end of this year.
