What Happened
- Semiconductor chip design startups supported under India's Design Linked Incentive (DLI) Scheme continue to attract significant venture capital interest from leading investors.
- Peak XV Partners led a $15 million investment round for C2i Semiconductors, a DLI-backed startup developing next-generation power delivery solutions, following a $4 million funding round led by Yali Capital in 2024, bringing cumulative investment to approximately Rs 170 crore.
- Of the 24 startups currently participating in the DLI programme, 14 have secured venture capital funding, attracting nearly Rs 430 crore in aggregate.
- The government has announced plans to enable at least 50 fabless semiconductor companies in the next phase of the DLI Scheme.
- Deep Tech Awards will be instituted in 2026 to recognise innovation in semiconductors and other key sectors.
Static Topic Bridges
India Semiconductor Mission (ISM) and Self-Reliance
The India Semiconductor Mission was established in December 2021 under the broader Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India, with a total outlay of Rs 76,000 crore (~$10 billion). The mission aims to build a complete semiconductor ecosystem in India spanning design, fabrication, assembly, testing, and packaging. ISM operates under the Ministry of Electronics and Information Technology (MeitY) and provides fiscal support of up to 50% of project cost for approved projects.
- ISM 1.0 approved: December 2021, outlay Rs 76,000 crore
- ISM 2.0 announced: Union Budget 2026-27, Rs 1,000 crore for FY 2026-27
- Projects approved: 10 projects totalling Rs 1.60 lakh crore across 6 states (as of December 2025)
- Project types: silicon fabs, silicon carbide fabs, advanced packaging, memory packaging, assembly and testing
- Indian semiconductor market size: ~$38 billion (2023), projected $100-110 billion by 2030
- ISM 2.0 focus areas: semiconductor equipment and materials, full-stack Indian IP, supply chain resilience
Connection to this news: The DLI Scheme is the design-focused pillar of the India Semiconductor Mission, and the growing investor confidence in DLI-backed startups validates the government's ecosystem-building approach to semiconductor self-reliance.
Design Linked Incentive (DLI) Scheme
The DLI Scheme, launched as part of ISM in December 2021, specifically targets semiconductor design, which is the highest value-added segment of the chip value chain. India already has a significant talent base in chip design, with over 20% of the world's semiconductor design engineers based in India. The scheme provides financial incentives covering product design costs, EDA (Electronic Design Automation) tool access, and IP core support to de-risk the capital-intensive chip design process for startups.
- DLI Scheme startups currently supported: 24
- Startups that have secured VC funding: 14 (of 24)
- Total VC funding attracted: nearly Rs 430 crore
- Next phase target: at least 50 fabless semiconductor companies
- Support provided: financial incentives, EDA tool access, IP core access, mentorship
- India's chip design workforce: over 50,000 engineers, growing rapidly
Connection to this news: The C2i Semiconductors funding round and the overall Rs 430 crore in VC investment demonstrate that the DLI Scheme is successfully catalysing private sector confidence in India's fabless chip design capabilities.
Global Semiconductor Supply Chain and India's Strategic Position
The global semiconductor supply chain is highly concentrated, with design dominated by the US (Qualcomm, Intel, Nvidia), fabrication by Taiwan (TSMC) and South Korea (Samsung), equipment by the Netherlands (ASML), Japan, and the US, and assembly/testing by Southeast Asia and China. The COVID-19 pandemic-induced chip shortage (2020-2022) and US-China tech rivalry have accelerated efforts by multiple countries to diversify and onshore semiconductor production.
- Global semiconductor market: approximately $600 billion (2025)
- US CHIPS Act (2022): $52.7 billion for domestic semiconductor manufacturing and R&D
- EU Chips Act (2023): EUR 43 billion to double EU semiconductor market share to 20% by 2030
- TSMC alone produces ~90% of the world's most advanced chips (sub-7nm)
- India's import bill for electronics and semiconductors: over $100 billion annually
- Geopolitical flashpoint: Taiwan Strait and its implications for global chip supply
Connection to this news: India's push to develop indigenous chip design capability through the DLI Scheme is part of a global race to de-risk semiconductor supply chains, reducing dependence on a handful of concentrated production centres.
Key Facts & Data
- ISM 1.0 outlay: Rs 76,000 crore (December 2021)
- ISM 2.0: Rs 1,000 crore allocated for FY 2026-27
- DLI Scheme startups: 24 currently supported; 14 have secured VC funding
- Total VC funding attracted by DLI startups: ~Rs 430 crore
- C2i Semiconductors: $15 million led by Peak XV Partners (cumulative ~Rs 170 crore)
- ISM-approved projects: 10 projects, Rs 1.60 lakh crore across 6 states
- Indian semiconductor market: ~$38 billion (2023), projected $100-110 billion by 2030
- India's chip design workforce: 50,000+ engineers (~20% of global design talent)
- Next DLI target: at least 50 fabless semiconductor companies