Daybreak India wants a chip-design hub—without the founders who can make it happen
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Apr 6, 2026 A look at India’s push to build a domestic chip-design industry and the policy rules blocking experienced returnee engineers. The podcast explores ownership restrictions, reimbursement risks, and why some startups opt for foreign funding. It also covers regulatory conflicts, manufacturing bottlenecks, and suggested fixes for the next phase of the scheme.
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Ownership Rules Keep Diaspora Out
- India's DLI scheme demands majority Indian ownership and that beneficiaries be Indian-majority, which deters diaspora founders and foreign-backed startups.
- The Rs 1,000 crore program onboarded only 24 startups in phase one against a 100 target and had FY26 budget cut in half.
Returned Founder Blocked By Citizenship Rule
- Sanjay Palsamudram returned to India after decades but remained a US citizen, making his firm ineligible for DLI despite his Indian work and taxes.
- He set up Seven Race Semiconductors in 2023 yet couldn't claim Indian ownership benefits due to citizenship rules.
Reimbursement Structure Raises Cash Risk
- Reimbursements require startups to spend first and keep majority Indian ownership for three years or repay with interest, raising cash-and-risk barriers.
- Of 128 applicants for EDA tools, 82% got access, but only 24 received financial support.