Domestic chip design to receive big push through Rs 1.27 lakh crore Semicon 2.0

The Indian government announced a Rs 1.27 lakh crore Semicon 2.0 program to prioritize chip design and intellectual property development. This initiative, approved by the Union Cabinet in July, will provide support across six pillars, with substantial funding directed at chip design. Incentives are offered for strategic, commercial, and domestically developed chips.

The Centre for Development of Advanced Computing (C-DAC) will issue requests for proposals and select developers through competitive bidding. Indian-owned and controlled companies can participate in these projects independently or with global partners. The IP created will be jointly owned by the company and C-DAC. A separate design track aims to build commercially viable Indian fabless chip companies, with eligible firms receiving up to Rs 15 crore in seed funding or 50% of project costs.

Larger companies can opt for royalty financing, paying 5% of a product's net revenue until 1.5 times the government's financial support is recovered. For the supply chain, companies setting up R&D facilities for semiconductor equipment, plants making semiconductor-grade wafers, and other related units can receive up to 30% capital expenditure support.

This support is capped at 50% of eligible capital expenditure. The scheme also includes incentives for advanced semiconductor packaging, R&D projects, and talent development, with the goal of creating 50,000-60,000 direct jobs in the semiconductor ecosystem.