India Backs 23 Chip Design Projects to Boost Semiconductor Supply Chain

Posted by Written by Dezan Shira & Associates Reading Time: 3 minutes

The central government has approved 23 chip design projects under the Design Linked Incentive (DLI) Scheme, a key part of the Semicon India Programme, to strengthen the domestic semiconductor ecosystem.

The initiative aims to provide support to startups, MSMEs, and academic institutions in advancing chip design and innovation in the country.

The Union Ministry of Electronics and Information Technology (MeitY) approved 23 chip design projects under the Design Linked Incentive (DLI) Scheme, according to a press release issued on July 30, 2025. The DLI Scheme serves as a core element of the INR 760 billion (US$8.67 billion) Semicon India Programme, which aims to build a strong domestic semiconductor ecosystem. This includes supporting startups, micro-, small-, and medium-sized enterprises (MSMEs), and academic institutions engaged in chip design and development.

India expanding access to design infrastructure

By July 2025, 278 academic institutions and 72 startups had secured access to essential design resources through the scheme. These include advanced Electronic Design Automation (EDA) tools and Intellectual Property (IP) cores, which are vital for early-stage semiconductor design and prototyping.

The 23 sanctioned chip design projects cover a range of applications, including:

  1. Surveillance systems
  2. Smart energy meters
  3. Networking equipment
  4. Microprocessor IP cores

Industry engagement and commercial progress

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Among the approved firms, 10 startups have secured venture capital (VC) funding to support the commercialization of their chip designs. In addition, six companies have completed prototype tape-outs at international semiconductor foundries—marking development toward product readiness.

A notable academic achievement includes the successful fabrication of 20 chip designs from 17 institutions at the Semiconductor Laboratory (SCL) in Mohali, Punjab.

Funding and implementation status

The total project outlay sanctioned under the DLI Scheme has reached INR 8.03 billion (US$91.6 million), which includes the cost of EDA tools. Projects work through a milestone-based implementation framework, with fund disbursements tied to demonstrated progress in design, development, and deployment phases.

Overview of the DLI scheme

The DLI scheme, launched in December 2021, is part of the broader Semicon India Future Design program. The scheme plays a critical role in promoting domestic innovation, reducing reliance on imported technologies, and positioning India as a global semiconductor design hub.

The scheme primarily supports startups, MSMEs, and domestic companies involved in the design and development of semiconductor components. This includes integrated circuits (ICs), chipsets, System on Chips (SoCs), processors, sensors, and semiconductor IP cores. The scheme offers two structured financial support mechanisms:

a) Design prototyping support

  • Covers up to 50 percent of eligible project costs related to design and prototyping
  • Financial support is capped at INR 150 million (US$1.71 million) per application

b) Deployment and commercialization incentives

  • This offers performance-linked incentives of 4 percent to 6 percent of net sales turnover for a period of five years.
  • Incentives are capped at INR 300 million (US$3.42 million) per application.

The DLI scheme is designed to promote India’s indigenous design capabilities and foster globally competitive semiconductor design startups.

India’s semiconductor growth trajectory

India is driving its semiconductor ambitions in line with its broader technological transformation, fueled by rising demand across industries such as artificial intelligence (AI), autonomous mobility, and advanced electronics. To meet this demand, the government has designated semiconductor development as a national strategic priority.

Under the Semicon India Programme, the government has allocated funding specifically to enhance manufacturing capabilities in semiconductor fabs, display fabs, compound semiconductors, and packaging facilities.

CLICK HERE: India’s Semiconductor Sector: Tracking Government Support and Investment Trends

Projected market growth and funding trends

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A media report projects India’s semiconductor market to reach US$150 billion by 2030. To support this growth, India is reportedly planning the second phase of the India Semiconductor Mission (ISM), which could expand support for chip design and packaging projects.

Investor interest in the sector has surged. In 2024, Indian semiconductor startups raised US$28 million—up from US$5 million in 2023. Noteworthy deals include US$8 million for Mindgrove Technologies and US$6 million for FermionIC, reflecting growing investor confidence in India’s semiconductor landscape.

Conclusion

India’s semiconductor policy framework—led by the Semicon India Programme, ISM, and DLI Scheme—illustrates a coordinated strategy to achieve self-reliance and global competitiveness. With increasing public investment, institutional participation, and private sector engagement, India is well-positioned to become a leading hub for semiconductor design and innovation in the coming decade.

(US$1 = INR 87.63)

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