MeitY has notified the Semicon 2.0 scheme, making Indian-owned startups and companies eligible for the chip-design programme. Startups and MSMEs can receive up to Rs 15 crore in seed funding, with other financing options for larger firms.

Chip Design Programme: Eligibility and Funding

Startups and companies owned by Indian citizens or Overseas Citizens of India (OCIs) will be eligible to participate in the commercial chip-design programme under Semicon 2.0, with startups and MSMEs eligible for grant and equity co-investment support, while larger companies can access royalty financing or equity co-investment, according to the scheme notified by the Ministry of Electronics and Information Technology (MeitY) on Monday.

Under the scheme, eligible startups and MSMEs can receive milestone-linked seed funding of 50 per cent of project cost or Rs 15 crore, whichever is lower. Companies that have already secured funding from venture capital or private equity investors can also receive equity co-investment on terms similar to those offered by the investors. For larger eligible companies, the government will provide royalty financing or equity co-investment. Under the royalty-financing route, companies will pay 5 per cent of net revenue generated by the product or technology until an amount equivalent to 1.5 times the financial support provided by the government has been recovered.

Exit and Repayment Terms

The scheme also provides exit options for beneficiaries, with companies availing seed funding or equity co-investment required to repay either the aggregate seed funding and prevailing market value of the government's equity holding, or 1.5 times the total financial support, whichever is higher. Companies opting for royalty financing can exit by repaying 1.5 times the support if they exit within four years, or twice the support if they exit after four years.

Company Eligibility and Collaboration

For commercial semiconductor design, eligible companies must be incorporated and headquartered in India, have a significant operational and manpower presence in the country and be owned and controlled by Indian citizens or OCIs. They can participate independently or in consortiums with global companies, R&D organisations and academic institutions.

Infrastructure and Design-Linked Incentives

The design programme also provides access to infrastructure, including the national EDA tools grid, multi-project wafer fabrication services, IP cores, compute sub-systems and post-silicon validation services.

For newly launched semiconductor IPs, chips and SoCs, eligible applicants can additionally receive a 9 per cent reimbursement on net sales for five years, subject to a maximum incentive of Rs 30 crore per application and Rs 120 crore per company, including group companies. The products must be launched for the first time after the scheme's announcement and must have had no prior sales by the applicant.

Broader Semicon 2.0 Scheme: Fabs and Packaging

The scheme, backed by a Rs 1.27 lakh crore outlay, extends beyond chip design to fabs, packaging, equipment, materials, research and talent development.

Requirements for Silicon Wafer Fabs

For silicon wafer fabs, applicants must propose 300-mm wafer facilities with capacity of at least 40,000 wafer starts per month, possess production-grade licensed technology, invest at least Rs 20,000 crore and have revenue of at least Rs 7,500 crore in one of the preceding three financial years. Such projects will receive 40 per cent of eligible capex on a pari-passu basis.

Compound Semiconductor and Other Fabs

Compound semiconductor, photonics, sensor/MEMS and discrete semiconductor fabs require minimum investment of Rs 500 crore and revenue of Rs 200 crore, with government support of 35 per cent of eligible capex.

ATMP/OSAT Facilities

For ATMP/OSAT facilities, advanced packaging projects require Rs 1,000 crore investment and Rs 200 crore revenue and qualify for 35 per cent capex support, while legacy packaging projects with the same thresholds receive 25 per cent support.

Support for Advanced R&D

The scheme also provides up to 75 per cent of project cost for advanced semiconductor R&D, covering eligible capex and opex.

Implementation and Oversight

The India Semiconductor Mission will act as the nodal agency and assess applications on technical and financial parameters, including technology, implementation capability, operations and offtake. The latest notification follows the Union Cabinet's approval of a Rs 1.27 lakh crore outlay for the next phase of India Semiconductor Mission under Semicon 2.0. (ANI)

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