Government Clears 12 Indian Start-ups for Incentives Under Chip Design Plan
- September 9, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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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.