How PLI scheme incentives and the India Semiconductor Mission are creating advisory, licensing, and compliance opportunities.
India Semiconductor Mission — Policy Framework
The India Semiconductor Mission (ISM), established under MeitY with a corpus of Rs 76,000 crore, represents the government's most ambitious industrial policy initiative since the National Telecom Policy. The scheme provides fiscal incentives of up to 50% of project cost for semiconductor fabrication facilities, along with streamlined land acquisition, environmental clearances, and infrastructure support. Three greenfield fab projects have been approved as of Q1 2026, and the government has indicated that applications for additional display and packaging units are under evaluation.
For technology founders and advisory firms, the ISM creates a new category of compliance, regulatory interface, and commercial opportunity. Companies seeking ISM benefits must navigate approval processes across multiple ministries — MeitY for scheme sanction, MoEFCC for environmental clearances, and state governments for land and water allocation. The approval matrix is complex, and experienced advisory support in preparing techno-economic feasibility reports and coordinating inter-ministerial approvals is in significant demand.
PLI Scheme and Downstream Opportunities
Beyond the fab and ATMP (Assembly, Testing, Marking and Packaging) schemes, the PLI scheme for IT Hardware and the SPECS scheme for electronics components create opportunities for Indian technology companies along the supply chain. Companies investing in PCB fabrication, embedded systems, power semiconductors, and compound semiconductors are eligible for production-linked incentives, subject to meeting domestic value addition targets. These requirements create a need for annual compliance certification and output verification, which represents a meaningful advisory opportunity for CA firms with manufacturing sector expertise.
For startups designing chips and IP cores — a growing segment led by fabless semiconductor companies — the Design Linked Incentive (DLI) scheme provides reimbursement of 50% of eligible expenses for chip design, tapeout, and prototyping. Qualifying requires registration on the ISM portal and periodic reporting of design progress against milestones. The regulatory reporting and IP commercialisation advisory for DLI-beneficiary startups is an emerging practice area that complements traditional incorporation and FEMA advisory services.
Technology Licensing and IP Structuring
A critical but underappreciated dimension of India's semiconductor ambition is the technology licensing landscape. Domestic fabrication and packaging ventures typically access process technology through licenses from foreign technology providers — Taiwanese, Japanese, and Korean equipment and process IP holders. Structuring these licenses within FEMA and tax frameworks requires careful attention to royalty withholding tax, permanent establishment risk for the licensor, and transfer pricing compliance for related-party IP transactions.
Founders considering a semiconductor or deep-tech venture in India should also evaluate the IP holding structure at inception. Holding key IP in an India-incorporated subsidiary or a GIFT City structure can optimise the tax treatment of royalty income, reduce withholding costs for foreign licensees, and position the company for better outcomes in future fundraising or M&A. A proactive IP structuring exercise, ideally conducted before the first international technology agreement is signed, can create significant long-term value.
