Government Clears 12 Indian Start-ups for Incentives Under Chip Design Plan

Government Clears 12 Indian Start-ups for Incentives Under Chip Design Plan

Sub :Eco

Sec: National Economy

• Total Project Cost:
  • The approved projects will cost a total of Rs 342 crore, with the Centre committing close to Rs 133 crore towards them.
• Government Financial Assistance:
  • So far, the government has released over Rs 7 crore in financial assistance.
  • Out of the 59 applications received under the Design Linked Incentive (DLI) scheme, 12 start-ups have been cleared for assistance, while 21 applications are still under review.
• India’s Chip Design Ambition:
  • India is emerging as a major force in chip designing, with most global semiconductor companies having design offices in the country.
  • Traditionally, Indian engineers have designed systems for foreign companies, resulting in little intellectual property (IP) creation.
  • The DLI scheme is an attempt to address this gap by incentivizing the development of IP in India.
• Scheme Progress:
  • The government’s goal is to fund at least 100 start-ups over five years, which translates to 20 entities per year.
  • However, since December 2021, only 12 start-ups have been approved.
• Semiconductor Units in India:
  • Recently, India approved its fifth semiconductor unit, an assembly and testing plant by Kaynes Semicon in Gujarat.
• Previously approved projects include:
  • Tata Electronics’ $11 billion fabrication plant in partnership with Taiwan’s Powerchip.
  • Three chip assembly plants by the Tata Group, Micron Technology (USA), and CG Power in partnership with Japan’s Renesas.
• Future Plans:
• Additional proposals for semiconductor units are under review, such as:
  • Israel’s Tower Semiconductor in partnership with the Adani Group.
  • A Rs 4,000 crore assembly plant by Zoho.
• Next Phase of Semiconductor Scheme:
  • The government has almost committed the full $10 billion under the current phase and is preparing for a second phase. The outlay could increase to $15 billion, focusing on capital support for raw materials used in chip manufacturing, while reducing subsidies for assembly and testing plants.

Design-Linked Incentive (DLI) Scheme

• Objective and Aim:
  • The Design-Linked Incentive (DLI) scheme aims to offer financial incentives and design infrastructure support across various stages of semiconductor design development for:
• Integrated Circuits (ICs)
• Chipsets
• System on Chips (SoCs)
• Systems & IP Cores
• Semiconductor-linked designs
  • Duration: The scheme is initially for three years, starting from 01-01-2022.
• Key Objectives:
  • Nurturing domestic companies, startups, and MSMEs to boost the semiconductor industry.
  • Achieving indigenization in semiconductor content and intellectual property (IPs) for electronic products to reduce imports and increase value addition in the electronics sector.
  • Strengthening access to semiconductor design infrastructure for startups and MSMEs.

Three Components of the Scheme:

• Chip Design Infrastructure Support:
• C-DAC will set up the India Chip Centre to provide state-of-the-art design infrastructure such as:
• EDA Tools
• IP Cores
• Support for MPW (Multi-Project Wafer) fabrication
• Post-silicon validation
  • This infrastructure will be accessible to supported companies.
• Product Design Linked Incentive:
  • Offers reimbursement of up to 50% of eligible expenditure, with a ceiling of ₹15 crore per application.
  • Fiscal support will be provided to approved applicants engaged in semiconductor design.
• Deployment Linked Incentive:
  • Provides an incentive of 6% to 4% of net sales turnover over 5 years.
  • The maximum incentive per application is ₹30 crore.
  • This is applicable to approved applicants whose semiconductor designs for ICs, Chipsets, SoCs, Systems & IP Cores are deployed in electronic products.

Nodal Agency: C-DAC (Centre for Development of Advanced Computing) is the nodal agency responsible for the implementation of the DLI scheme.

Centre for Development of Advanced Computing (C-DAC) 

• Overview:
  • C-DAC is a premier R&D organization under the Ministry of Electronics and Information Technology (MeitY), Government of India.
  • It focuses on high-performance computing, software technologies, networking, cybersecurity, and semiconductor design.
• Mission:
  • To drive innovation in IT and electronics, promoting the development of indigenous technologies.
  • To facilitate the growth of advanced computing and electronics in India, aligning with national priorities.
• Key Objectives:
  • Research and Development in advanced computing, software, and electronics technologies.
  • Providing solutions to national technological challenges in computing, cybersecurity, and networking.
  • Enabling the growth of the semiconductor and electronics design ecosystem in India.