India’s DLI 2.0: Incentives and Mandates to Spur Domestic Semiconductor Demand

The government is updating its DLI program to encourage the production and use of domestically designed semiconductors across India’s electronics sector.

As part of the India Semiconductor Mission 2.0, officials say the Centre is considering targeted financial incentives for chipsets used in 25 electronic product categories.

The includes TV sets, air conditioners, refrigerators, energy meters, telecom equipment, and IoT devices, as per The Economic Times report.

Semiconductor industry executives have indicated that their future investment plans in India would depend on whether chips produced locally could also be sold within the country. The Ministry of Electronics and Information Technology (MeitY) believes this dual approach financial incentives and local sourcing regulations will help domestically produced chips find immediate applications in consumer electronics.

What is Design-Led Incentives (DLI 2.0)

The updated DLI scheme will continue to support startups and MSMEs developing indigenous chips and system-on-chip (SoC) solutions. Since its launch in December 2021, the government has sanctioned 23 chip-design projects under the Rs 1,000 crore DLI scheme.

These projects focus on areas such as surveillance cameras, energy meters, microprocessor IPs, and networking applications.

Officials emphasise that R&D efforts should focus on designing and producing chipsets for a range of consumer electronics. This approach not only ensures immediate applications but also builds expertise and industrial scale for more advanced electronics in the future.

Local Sourcing Mandates for Chip Manufacturing

Alongside financial incentives, the Centre may implement stricter local sourcing rules to increase the use of domestically manufactured chips in consumer electronics.

Officials note that mandates will gradually raise local value addition in manufacturing, with potential increases of 15–35% depending on device complexity, the report added.

Certification requirements, similar to those introduced for CCTV cameras last year, may accompany these rules to ensure compliance.

In April 2024, MeitY mandated that all CCTV cameras imported, manufactured, or retailed in India be certified by the Standardisation Testing and Quality Certification Directorate to safeguard national security.

Access to EDA Tools

DLI 2.0 will continue providing access to industry-standard Electronic Design Automation (EDA) tools, which are expensive and typically cost tens of thousands of dollars per license.

So far, 278 academic institutions and 72 companies have received access to these tools under the original DLI scheme, helping them design chips and SoC solutions for various applications.

Read More: MosChip Technologies Share Price Hits Record High as India Pushes Semiconductor Mission 2.0.

Conclusion

DLI 2.0 is designed to create a self-sustaining semiconductor ecosystem in India. The combination of financial incentives, local sourcing mandates, and access to essential design tools is expected to ensure that domestic chips have immediate applications in consumer electronics while building the expertise needed for more advanced products in the future.

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