GANDHINAGAR : The Union government is evaluating a proposal to include large multinational companies in India’s $200 million design-linked incentive (DLI) scheme if they were designing chips in the country, said Rajeev Chandrasekhar, minister of state for electronics and information technology (IT).
The scheme is currently limited to startups. Under the scheme, seven startups have been given approvals for claiming incentives.
“One of the suggestions that has come up is that in the design and innovation side, not to limit it only to startups. If there’s a big Indian or foreign company that wants to do design and chip design in India, we should allow the future design scheme also to support them. So, I’m studying that," the minister said in an interview.
“As long as it is an original chip that is going to go into an application and the IP is Indian, we will look at supporting them financially," he added, clarifying that the government will not subsidize a foreign company’s design that was not being done locally.
The scheme’s expansion would be applicable to foreign companies that are fabless design makers such as NXP Semiconductors NV, Qualcomm Technologies Inc., and others, as well as large India-based chip design companies. The DLI scheme aims to offer financial incentives as well as design infrastructure support across various stages of development and deployment of semiconductor designs for integrated circuits, chipsets, system on chips, systems & IP cores, and semiconductor-linked designs over five years.
The minister said the government could consider not keeping an upper limit to the benefits that such proposals could have. “We are interested in the outcome, which is that it should be an India-designed chip," he said.
The extension would become a big attraction to global companies, said a top executive at a fabless chip-making company. “That would be fantastic because there are some design-centric projects that may be only specific to the Indian market. With such a facility, we can do it in India and get funded by the government," Hitesh Garg, India country manager for NXP Semiconductors, told Mint.
Chandrasekhar added that the design scheme would complement the production-linked incentive (PLI) scheme for IT hardware. The scheme enables a company to claim incentives if an India-designed chip or an Indian chip is incorporated into the company’s system design or system architecture.
The minister added that some states were interested in creating their own DLI schemes, which could add to the central scheme or stay independent of it.
The minister added that after US chipmaker Micron’s investment announcement, several compound fabs, at least four to five ATMP (assembly, testing, marking, packaging) projects, and memory-making companies had reached out to the government to set up their plants in India. He declined to name the companies.
Micron has decided to set up a $2.7 billion packaging and assembly plant for semiconductors in the country, where its own investment will be $825 million, while the Centre and the Gujarat government will provide 70% of the financial investment cost as incentives.
“There are different companies that say we will climb the ladder in India by starting with an ATMP and ending up with a fab, and it seems to me today that most companies will look at that option," he added.
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Updated: 31 Jul 2023, 12:15 AM IST
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