What ?

The Design Linked Incentive (DLI) Scheme is a program by the Indian government to help grow the country's semiconductor design industry.

Semiconductors are tiny chips used in electronics like phones, computers, and cars. India wants to become a leader in designing these chips instead of just buying them from other countries.

The scheme gives money and tools to Indian companies, startups, and small businesses (MSMEs) that work on chip designs. It started in December 2021 and is run by the Ministry of Electronics and Information Technology (MeitY). The goal is to make India self-reliant in technology and create jobs.

Why was the DLI Scheme Started?

There are many reasons such as

1. Build indigenous chip‐design capacity : Semiconductors (ICs, chipsets, SoCs, IP cores etc) are critical for electronics, telecom, defence, AI, IoT.  India has a strong talent pool (design engineers), but the industry had structural disadvantages (e.g., high entry costs, lack of infrastructure). The scheme aims to “offset the disabilities in the domestic industry involved in semiconductor design” and push India up the value-chain. 
2. Import substitution & value addition : Many electronic products in India rely heavily on imported chips/designs. The scheme aims to reduce dependence, increase indigenisation. By supporting domestic design, India hopes to add more value locally (rather than only manufacturing imported designs).
3. Strengthen design infrastructure : Beyond just money, the scheme supports access to design infrastructure (EDA tools, prototyping, multi-project wafers, validation) via nodal agency Centre for Development of Advanced Computing (C-DAC). This addresses the “infrastructure gap” that was inhibiting startups and MSMEs in chip design.
4. Global competitiveness & technology leadership : The Indian government wants India to become a global hub for electronics system design and manufacturing (ESDM) and semiconductors. As electronics evolve (AI, 5G/6G, EVs, chips for smart devices) the design part becomes strategic. So building capability now is forward-looking.
5. Attract investment and stimulate the ecosystem  : By offering incentives (covering part of cost, linking deployment to turnover incentives) the scheme makes investment in design more viable. 
6. Helps startups/MSMEs to enter chip design – often high-barrier because of capital and know-how.

What Does the Scheme Cover?

The Design Linked Incentive (DLI) Scheme covers several areas of semiconductor design to help Indian companies grow in this field. It supports the creation of:

• Integrated Circuits (ICs): These are the basic building blocks of electronic chips.
• Chipsets: A group of chips that work together in a device.
• System on Chips (SoCs): Complete systems built on a single chip, used in phones, cars, and other smart devices.
• IP Cores: Reusable parts of chip designs that can be used in multiple projects.
• Other semiconductor-related designs: Any other innovations connected to chip development.

The scheme has three main parts:

1. Design Infrastructure Support:This helps startups and small or medium-sized businesses (MSMEs) get access to important design tools, software, and testing facilities that are usually very expensive.
2. Product Design Linked Incentive (P-DLI):This provides financial help for companies that are developing their chip designs up to a stage where the product is ready for manufacturing. It encourages innovation and helps turn ideas into real products.
3. This gives financial rewards to companies once they start selling their finished chip products in the market.Deployment Linked Incentive (DLI):

Who Can Apply? 

To apply for the DLI Scheme, your company must be Indian-owned, meaning more than 50% of it should belong to Indian citizens or residents. This includes domestic companies, startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), and MSMEs (Micro, Small, and Medium Enterprises) as per government rules. Your company must be working on semiconductor design projects, and it must remain Indian-owned for at least three years after receiving the incentive.

To get financial support under the scheme, companies also need to meet minimum sales targets — ₹1 crore per year for startups and MSMEs, and ₹5 crore per year for larger companies. Eligible expenses include salaries (up to 50% of the total limit), costs for equipment, software, testing, and production — but only if these expenses happen after your application has been officially accepted.

What Support Do You Get?

The DLI Scheme provides two main types of support — financial help and infrastructure support.

1. Under financial incentives, companies can get up to ₹30 lakh for design infrastructure to cover costs like making and testing prototype chips. For Product Design Linked Incentives (P-DLI), companies can receive up to 50% of their eligible costs, with a maximum of ₹15 crore, given in stages as they reach milestones such as completing design or testing.
2. For the Deployment Linked Incentive (DLI), companies can earn a percentage of their sales — 6% in the first two years, 5% in the next two, and 4% in the fifth year, up to a maximum of ₹30 crore over five years, provided they meet the required sales targets. The total support lasts for six years, but can be extended if needed.
3. Under infrastructure support, companies get access to advanced software tools for chip design (called EDA tools), a library of reusable design components (IP repository), and assistance in making and testing prototypes. They also receive access to online learning materials and connections with manufacturing partners and experts. The Centre for Development of Advanced Computing (C-DAC) is the main agency responsible for managing and supporting this scheme.

Recent Updates 

As of August 2025, the government has approved 23 chip design projects under DLI. These are mostly from startups and MSMEs, focusing on things like surveillance cameras, energy meters, and networking chips. Also, 72 companies now have access to advanced design tools. One example is Vervesemi Microelectronics, which is making chips for motors, electric vehicles, space tech, and smart meters. Their products will start production in 2026-2027. This is part of a bigger ₹76,000 crore (about US$8.67 billion) program to boost India's semiconductor industry.

Why is DLI Important for India?

The scheme helps reduce India's dependence on imported chips, which saves money and makes the country more secure. It creates high-tech jobs, encourages innovation in areas like defense, space, and energy, and aims to put "Made in India" chips in devices worldwide. By supporting startups, it builds a strong future for India's tech sector.In short, DLI is a smart way for India to join the global chip race.