India’s nascent semiconductor design ecosystem is pressing for stronger state backing, with companies supported under the Design Linked Incentive (DLI) scheme urging the government to create assured demand through public procurement, according to a report by The Economic Times.
The report highlights a growing concern among domestic chip design firms that, despite receiving financial incentives under initiatives like the Design Linked Incentive (DLI) scheme, they face limited market access and scaling challenges. Industry participants argue that without a reliable pipeline of orders—particularly from government departments, public sector units, and strategic sectors—the initial gains from the DLI scheme risk being undermined.
Executives cited in the article emphasize that procurement commitments could act as a critical bridge between product development and commercial viability. Many of these firms are still in early stages, focused on specialized chips for sectors such as telecommunications, automotive electronics, defense, and the Internet of Things. While these segments offer long-term promise, they also require validation, certification, and integration into larger systems—processes that can be difficult without anchor customers.
The DLI scheme, introduced as part of India’s broader semiconductor mission led by the India Semiconductor Mission (ISM), was designed to catalyze domestic chip design capabilities by offering financial incentives linked to milestones and sales. However, industry stakeholders argue that incentives alone do not guarantee market adoption. They are advocating for policy measures that would prioritize locally designed chips in government tenders or mandate certain levels of domestic sourcing in publicly funded projects, potentially leveraging platforms like the Government e-Marketplace (GeM).
According to The Economic Times report, companies believe such steps would not only boost their revenues but also help build credibility with private-sector clients and international partners. Government procurement is seen as particularly influential in sectors like defense and infrastructure, where state agencies are often among the largest buyers.
There is also a strategic dimension to these demands. Industry voices stress that nurturing a domestic chip design base is essential for technological self-reliance, aligning with broader initiatives such as Make in India for electronic systems, especially amid ongoing geopolitical tensions and supply chain disruptions. Ensuring that Indian firms have both the capability and the market access to compete is viewed as a national priority.
Officials, while acknowledging the concerns, are said to be weighing the implications of procurement-based support, including compliance with global trade frameworks such as the WTO Agreement on Government Procurement and the need to maintain competitive neutrality. Policymakers are also considering how best to integrate such measures with existing initiatives aimed at attracting semiconductor fabrication and assembly investments.
The push from DLI-backed companies reflects a broader challenge in industrial policy: bridging the gap between early-stage support and sustainable commercial ecosystems. As India seeks to establish itself as a meaningful player in the global semiconductor value chain, the success of its design-led approach may hinge not only on incentives but on the creation of dependable demand within its own borders.
