Alongside the headline investments in fabs and packaging plants, India has also targeted the design end of the semiconductor chain through the Design-Linked Incentive (DLI) scheme. While fabs capture attention, the DLI reflects an understanding that a durable industry needs domestic companies designing chips, not only factories building them.

What the scheme offers

The DLI is aimed at Indian companies, particularly startups and smaller firms, working on integrated circuit design, chipsets, IP cores and related products. It combines two broad forms of support: help with the cost and infrastructure of design, such as access to expensive EDA tools and prototyping, and incentives linked to deployment and sales of the resulting products.

The logic is that chip design has a high barrier to entry, dominated by the enormous cost of tools, IP licensing and prototyping runs. By lowering these barriers, the scheme tries to let promising domestic teams reach working silicon they could not otherwise afford.

Why fabless matters

• Fabless design is far less capital-intensive than fabrication, making it accessible to startups.
• Successful design houses create high-value engineering jobs and retain talent in India.
• Domestic designers can serve local needs in areas like power, automotive and IoT.

The realistic view

Building successful chip companies is hard everywhere. It demands not just funding but deep design expertise, patient capital, access to foundries and customers willing to adopt new silicon. A single incentive scheme cannot manufacture all of that, and the number of globally significant fabless firms that any country produces is small.

Even so, the DLI matters as a signal and as a foundation. It nurtures a cohort of design teams, some of which may mature into substantial companies, and it complements the manufacturing push by ensuring India develops strength across the value chain rather than only in factories. For students of VLSI, the scheme is a reminder that design skills, from architecture through verification to physical implementation, sit at the heart of where value is created in this industry.