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Design Linked Incentive scheme
The Design Linked Incentive scheme, or DLI, is the part of the India Semiconductor Mission aimed at chip design rather than chip manufacturing. Where a fabrication plant like the one in Dholera physically makes chips, DLI supports the Indian companies, startups, and academic teams that design them. The scheme provides financial support across the design stages and some deployment-linked incentive on chips that are actually sold. DLI matters to the wider Dholera story because a fab needs a healthy design ecosystem around it, and DLI is the mission's tool for growing the domestic design talent and firms that could one day send work to Indian fabs.
Last checked 2026-08-11 · every figure below carries its source
What DLI is for
The Design Linked Incentive scheme addresses a different part of the chip industry than a fabrication plant does. Designing a chip and manufacturing it are separate businesses, often carried out by separate companies in different countries. A design house creates the blueprint, the detailed layout of transistors and circuits, and then hands that design to a fab that turns it into physical silicon. India has long had a large pool of engineers who do design work for global firms, but relatively few Indian-owned companies that own the chips they design. DLI exists to change that balance. It offers financial support to domestic companies, startups, and academic teams working on chip design, helping them cover the heavy upfront costs of design tools, prototyping, and getting a first product made. The scheme is deliberately aimed at smaller and earlier-stage players than the giant fabs, because design businesses can be built with far less capital and can create skilled jobs more quickly. In the mission's overall logic, DLI is the front end of a pipeline. A country that designs its own chips has more control over its technology and a stronger reason to build and use its own fabs. For Dholera, a thriving national design base is part of the ecosystem that gives a domestic fab customers and relevance over the long term.
How the support is structured
DLI provides support across the life of a design project rather than as a single grant. Broadly, it helps with the design phase itself, where the costs of specialised software, intellectual property, and engineering are high, and it adds a deployment-linked element that rewards designs which are actually manufactured and sold. This two-part shape is intentional. Supporting the design phase lowers the barrier to even attempting a chip, which is where many small teams would otherwise stall. Linking part of the incentive to real deployment then pushes companies toward finished, commercial products instead of designs that never leave the lab. The scheme is administered within the India Semiconductor Mission framework, with a designated implementing agency handling applications and disbursement. Because DLI targets startups and smaller firms, its individual support amounts are far smaller than the sums involved in a fabrication plant, and readers should not confuse the two. A design incentive measured in the range that suits a startup is a different order of magnitude from the roughly Rs 91,000 crore investment behind the Dholera fab. The precise ceilings and percentages are set out in the scheme's own guidelines, which have been revised over time, so the safest description is that DLI shares a meaningful part of design and deployment costs rather than any fixed figure quoted here.
Why design matters alongside a fab
It is tempting to treat the Dholera fabrication plant as the whole of India's semiconductor ambition, but a fab in isolation is only half a supply chain. A fab needs designs to manufacture, and those designs come from design houses. If all the designs a fab makes originate abroad, the domestic value captured is narrower and the strategic benefit thinner. DLI is the mission's attempt to build the other half, a base of Indian firms that own intellectual property and can, over time, route work to Indian fabs. The connection is not immediate. A startup supported by DLI today is unlikely to be a major customer of the Dholera fab tomorrow, because design maturity and fab qualification both take years. But the long-run logic is that a country with both design and manufacturing keeps more of the industry's value and is less dependent on imports. For readers following Dholera, DLI is worth understanding precisely because it explains why the mission is not only about one giant plant. The plant is the visible landmark. The design ecosystem that DLI nurtures is the quieter, distributed effort that determines whether that landmark has a domestic industry around it.
What DLI does not cover
It is worth being precise about DLI's limits, because the scheme is easy to overstate. DLI does not fund chip manufacturing. It does not pay for a fabrication plant, and it has nothing directly to do with the roughly Rs 91,000 crore Tata and PSMC fab in Dholera, which is supported under the mission's separate fabrication track. DLI also does not guarantee that a supported design will become a commercial success, and its deployment-linked element rewards results rather than promising them. Because the scheme targets startups and smaller firms, its individual support amounts are modest by the standards of the wider mission, and readers should not compare a design incentive with the multi-billion-rupee sums attached to a fab. The scheme is administered within the India Semiconductor Mission framework through a designated implementing agency that handles applications and disbursement against agreed conditions, and as with the rest of the mission, support follows verified progress rather than arriving on approval. Finally, DLI is not a promise of returns to any investor or observer. It is a cost-sharing tool aimed at lowering the barrier to designing chips in India, and its success will be measured over years in the number of Indian-owned designs that reach real products.