India’s Semiconductor Design 2025: How Design Linked Incentives Are Driving a Bold Localisation and Fabless Innovation Wave

GeoInflux

2 months ago

India’s semiconductor design ecosystem is growing fast, but localisation remains limited. This article explores how the Design Linked Incentives (DLI) Scheme and fabless startups like Mindgrove are driving India’s journey toward chip design independence.

Quick Take

India’s semiconductor mission has focused on building local chip design capability through policy incentives like the DLI Scheme. Fabless startups such as Mindgrove Technologies, InCore Semiconductors, and Morphing Machines are proving that design innovation is possible without domestic fabrication plants.

But experts say that unless localisation goes beyond design to packaging, testing, and supply-chain integration, India risks staying a design-only economy.

The DLI Scheme’s early results show promise: over 25 companies have applied, 7 have been approved, and several chips are already taped out. The next challenge is scale—capital, infrastructure, and global foundry access.

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How is India’s semiconductor design ecosystem evolving?

How Design Linked Incentives Are Driving a Bold Localisation and Fabless Innovation Wave

India’s design ecosystem is unique: 20 per cent of the world’s chip design engineers work here, yet most chips are for foreign clients. The country contributes heavily to EDA tools, IP blocks, and verification—but not to end-to-end products.

That’s changing. A new wave of India chip startups is shifting from contract work to independent design. Companies like Mindgrove, InCore, and Saankhya Labs are building original SoCs and microcontrollers targeting IoT devices and automotive systems.

India’s Semiconductor Mission (ISM), launched in 2021, gave structure to this push.
The DLI Scheme, worth ₹ 10,000 crore, supports startups designing chips or IP cores in India.
The Chip to Startup (C2S) programme aims to train 85,000 engineers in VLSI and embedded systems.

These initiatives are making design—not fabrication—the core of India’s chip sovereignty plan.

Mindgrove’s success as India’s first commercial IoT SoC startup shows what the DLI Scheme can achieve when academic research, private capital, and policy support align.
Read the full story here → India Chip Startup Mindgrove Redefines Chip Design in India

What is the Design Linked Incentive Scheme, and how does it work?

The DLI Scheme, introduced by MeitY in December 2021, focuses on strengthening domestic design capacity. It provides:

Up to ₹ 15 crore support per design startup for proof-of-concept, validation, and tape-out.
Up to 50 per cent reimbursement for approved design activities.
Infrastructure access through C-DAC for EDA tools and IP libraries.

So far, MeitY has approved seven projects—including Mindgrove’s second chip, a vision SoC for smart devices. Most projects are fabless and target IoT, AI, and defence applications.

Key objectives of DLI:

Build Indian ownership of semiconductor IP.
Encourage fabless semiconductor India companies to scale.
Reduce import dependency for IoT and consumer hardware.

The scheme is administered by C-DAC with academic support from IIT Madras and IIT Delhi.

What are the gaps in India’s localisation policy?

Despite progress in design, local production remains weak.

Fabrication reliance: Most tape-outs are still sent to TSMC or Samsung fabs in Taiwan and Korea.
Packaging and testing: India has only a handful of assembly/test facilities (e.g., SPEL Semiconductors, Kaynes Semiconductor Unit).
Ecosystem fragmentation: Designers work in isolation from manufacturers, and supply chains aren’t integrated.

Even Mindgrove, which achieved a major breakthrough with its IoT SoC, had to outsource fabrication abroad. Its next goal is local packaging and testing with Indian partners. That’s where real localisation happens—not just in design, but in production ownership.

Experts warn that India cannot stop at fabless design. Without domestic packaging and assembly ecosystems, value capture stays low and dependence remains high.

How does India compare with global fabless success models?

Countries like Taiwan, South Korea, and the U.S. have a clear division of labour in their semiconductor chain. Taiwan’s TSMC dominates manufacturing; U.S. companies (AMD, Qualcomm, Nvidia) design chips without fabs.
India is now emulating that fabless semiconductor India model. But two things must follow to make it work :

IP ownership—chips must be designed and patented by Indian entities.
Domestic packaging and testing — to reduce export/import delays and costs.

If these steps succeed, India could own both the “brains” (design) and the “finishing” (packaging) of its chips even before building a large-scale fab.

What is the future of the DLI Scheme and semiconductor localisation?

India’s semiconductor Design mission is expected to expand the DLI scheme in 2026 with more funding and global foundry tie-ups. New proposals include:

A national EDA cloud to reduce design software costs for startups.
State-level design centres in Tamil Nadu, Karnataka, and Telangana.
Cross-border collaborations with TSMC, Intel Foundry, and GlobalFoundries.

The real goal is not just chip design in India; it’s hardware localisation India-wide. When startups like Mindgrove can design, package, and test their chips without leaving the country, India will finally own its silicon story.

End Note

India’s semiconductor design ecosystem is standing at a critical threshold. Policies like the DLI Scheme have kick-started a fabless revolution but not yet a fully localised one. The next phase demands stronger links between policy, academia, and industry.

Mindgrove Technologies, backed by IIT Madras and the DLI Scheme, proves that chip design in India can work — now it must scale.

References

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