Central Idea:

The Semiconductor Design-Linked Incentive (DLI) scheme in India, designed to foster semiconductor design capabilities, faces challenges due to limited results and structural issues. The article suggests a comprehensive revamp, addressing key challenges, emphasizing the importance of the design ecosystem, and proposing a shift in focus to cultivate indigenous semiconductor design capabilities.

Key Highlights:

• The DLI scheme, part of the $10 billion Semicon India Program, has approved only seven start-ups, falling significantly short of the target to support 100 over five years.
• India’s semiconductor strategy aims to reduce dependence on imports, build supply chain resilience, and leverage its comparative advantage in chip design.
• The article underscores the need to prioritize the design stage for stimulating India’s semiconductor industry.

Key Challenges:

• The DLI scheme has witnessed lackluster results and low participation.
• Barriers include restrictions on foreign funding and ownership for beneficiary start-ups.
• Modest incentives and a challenging funding landscape impede semiconductor start-ups in India.
• Concerns are raised about the nodal agency’s role, posing potential conflicts of interest.

Key Terms:

• Semiconductor Design-Linked Incentive (DLI) scheme.
• Semiconductor global value chain (GVC).
• Foundry and assembly stages of the semiconductor GVC.
• Electronic design automation (EDA) tools.
• Production-Linked Incentive schemes.
• Semiconductor Fabless Accelerator Lab (SFAL).
• India Semiconductor Mission.

Key Phrases:

• “Cultivate semiconductor design capabilities.”
• “Build supply chain resilience.”
• “Delink ownership from semiconductor design development.”
• “Shift focus to facilitate design capabilities for a wide array of chips.”
• “Revise policy to boost financial stability and provide global exposure.”

Key Quotes:

• “Stimulating the design ecosystem is less capital-intensive than foundry and assembly stages.”
• “The primary aim should be to cultivate semiconductor design capabilities in India.”
• “Enhance the financial outlay of the scheme substantially to support this policy shift.”

Key Statements:

• The article critiques the DLI scheme for its limited results and highlights barriers hindering effectiveness.
• Challenges faced by semiconductor start-ups, including funding issues and policy restrictions, are discussed.
• The need for a revamped DLI scheme, focusing on broader objectives and increased financial support, is emphasized.

Key Examples and References:

• Reference to the Karnataka government’s Semiconductor Fabless Accelerator Lab (SFAL) as a potential model for an implementing agency.
• Mention of the Union government’s recent statement emphasizing the importance of “India-designed chips.”

Facts and Data:

• Only seven start-ups approved under the DLI scheme, significantly below the target of supporting 100.
• Modest incentives under the DLI scheme, capped at ₹15 Crore for Product DLI and ₹30 Crore for Deployment Linked Incentive.
• The Semiconductor Design-Linked Incentive (DLI) scheme is a part of India’s $10 billion Semicon India Program.

Critical Analysis:

• The article critically evaluates the current DLI scheme, emphasizing the need for a more comprehensive and effective approach.
• Concerns about the nodal agency’s role and potential conflicts of interest are highlighted.
• The article stresses the significance of cultivating indigenous semiconductor design capabilities in India for sustained success.

Way Forward:

• Revise the DLI scheme to delink ownership, enhance financial incentives, and broaden the focus on semiconductor design capabilities.
• Consider a new implementing agency, such as the Semiconductor Fabless Accelerator Lab (SFAL), for a more effective approach.
• Emphasize the importance of cultivating indigenous semiconductor design capabilities in India for long-term success.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now