[Home](/)/[Resources](/resources)/India Semiconductor Mission IndiaPolicy # India Semiconductor Mission: Design-Linked Incentives and What It Means for Hardware Companies India's Semiconductor Mission is reshaping the country's electronics supply chain from the silicon up. Understanding the DLI scheme, fab incentives, and their interaction with PLI helps hardware companies position for the opportunities ahead. Copy Link[Share on WhatsApp](https://wa.me/?text=https%3A%2F%2Fkrono-labs.com%2Fguides%2Findia-semiconductor-mission) At a glance Programme India Semiconductor Mission (ISM) Administrator MeitY DLI Scheme Design-Linked Incentive Fab Incentive Up to 50% project cost for greenfield fabs ## Key ISM programmes and how they apply to hardware ### Design-Linked Incentive (DLI) Scheme Incentivises chip design startups and established companies through two tracks: a product design-linked incentive that reimburses up to 50% of eligible expenditure on EDA tools, IP licensing, and prototyping; and a revenue-linked incentive that pays a percentage of net sales on commercialised chips for up to five years. The DLI targets fabless semiconductor designers who create ICs for any end application. ### Semiconductor Fab incentive The government offers fiscal support of up to 50% of project cost for greenfield semiconductor fabrication units. The scheme extends to OSAT (outsourced semiconductor assembly and test) facilities and compound semiconductor fabs, which are more immediately feasible than leading-edge logic fabs. The first approved projects include the Tata/PSMC fab in Gujarat and the CG Power/Renesas OSAT facility. ### India Chip Design Centre (ICDC) programme MeitY funds access to commercial EDA tools and semiconductor IP for eligible fabless designers based in India. This lowers the barrier to entry for chip design startups that cannot afford enterprise EDA licensing at early stages. ICDC centres are co-located with academic institutions and government-supported incubators. ### Impact on hardware companies Companies importing custom ASICs or designing proprietary chips may qualify for DLI if design activity is conducted in India. Sourcing chips manufactured in India — once ISM-supported fabs reach volume production — may unlock PLI-scheme benefits under downstream electronics manufacturing schemes. The practical near-term impact is in OSAT and compound semiconductors rather than leading-edge logic. ## How to engage with the India Semiconductor Mission 01 Determine whether your company qualifies as a chip design entity (fabless), OSAT provider, or downstream electronics manufacturer that benefits from ISM-supported supply chains. Each category has a different access point to ISM incentives. 02 For chip design companies — register on the MeitY portal and apply under the DLI scheme. The scheme reimburses capital expenditure (up to 50% of EDA tool and IP costs) and provides revenue-linked payouts for commercialised chips. Applications are reviewed by a technical committee. 03 Evaluate whether sourcing chips from ISM-supported Indian fabs offers any PLI-scheme benefit for your finished electronics manufacturing. The PLI for IT Hardware and other product categories already rewards domestic value addition — domestically sourced chips increase that value addition percentage. 04 Track ISM's quarterly progress announcements — the Tata/PSMC fab in Gujarat and CG Power/Renesas OSAT facility are the first large-scale projects. Their production timelines directly affect supply chain feasibility for companies planning to source domestically fabbed chips. 05 Engage with IESA (India Electronics and Semiconductor Association) for ecosystem connections and government interface. IESA maintains working groups aligned with MeitY policy development and provides access to DLI application support and introductions to ISM programme managers. ## Frequently asked questions ### Who qualifies for the Design-Linked Incentive Scheme? The DLI scheme targets companies and startups engaged in semiconductor chip design — fabless designers who develop ICs, SoCs, chipsets, or other semiconductor products. The company must be registered in India and conduct design activity in India using EDA tools. There is no minimum revenue threshold for applying, making it accessible to early-stage chip design startups. The scheme covers a wide range of end applications including automotive, industrial, consumer electronics, and telecom ICs. ### What does India's Semiconductor Mission mean for hardware companies that import chips? In the near term, ISM primarily affects companies that design chips — the DLI scheme is relevant for fabless designers. For hardware companies that import commodity or custom chips without doing design work in India, ISM's direct impact is limited until Indian fabs reach production scale. The longer-term opportunity is supply chain diversification — once the Tata/PSMC fab and other ISM-supported facilities are operational, Indian hardware manufacturers may be able to source chips domestically, which counts toward PLI value-addition thresholds. ### When will India's first semiconductor fab be operational? The Tata Electronics/PSMC fab in Dholera, Gujarat — India's first large-scale semiconductor fabrication facility — is in construction as of 2025. Pilot production timelines are publicly targeted for late 2026 to 2027, though semiconductor fab construction schedules are complex and subject to revision. The CG Power/Renesas OSAT facility in Sanand, Gujarat is on a faster track as OSAT is less capital-intensive than front-end fabrication. ### How does the ISM interact with the PLI for electronics? The PLI for electronics (covering IT hardware, mobile phones, and other product categories) rewards companies based on incremental domestic production value. Domestically manufactured chips sourced from ISM-supported fabs would increase the domestic value addition component of PLI calculations, potentially pushing companies into higher PLI incentive tiers. The two schemes are complementary: ISM builds the chip supply chain, PLI rewards electronics assembly using that supply chain. **Disclaimer:** Educational resource only. Regulatory requirements change and vary by product category. Consult an accredited test laboratory or qualified compliance engineer before making certification decisions. 🇮🇳 India roadmap for your product Every standard, document, and test that applies — free, no account required. See your free roadmap[ Want an expert to take your product through 🇮🇳 India compliance for you? One consultant from Krono's compliance team takes your product from requirements to legal sale, with a fixed quote before any work starts. 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