Blockchain-Based IP Licensing in India’s 2025 Semiconductor Growth: Benefits and Challenges

Introduction

India is steadily advancing in the global semiconductor race. The nation is channeling large-scale investments into the chip industry, supported by governmental initiatives, and increasing number of patents being generated. In such a landscape, Intellectual property (IP) licensing becomes even more essential. Every design, process, and component involved in manufacturing a chip is tied to IP, and these rights must be shared, regulated and respected to amongst companies.

This is precisely where blockchain comes in and has a role to play. It has the potential to make licensing processes more transparent, reliable, and quicker, with records maintained on an independent digital ledger with “smart contracts” employed to automatically enforce agreements. In this blog, we examine how semiconductor expansion in India is linked to IP licensing through blockchain, the initial experiments are already underway, and the challenges that still persist.

Why Licensing Matters in India’s Semiconductor Push

The industry is being driven forward by the incentives provided by the government. Financing and subsidies for chip design as well as production are being offered under the Production Linked Incentive (PLI) and the Design Linked Incentive (DLI) schemes. In the year 2025, budgetary support was further augmented with an industry target of 110 billion by 2030.

Alongside this, India has seen an explosion in patents; over 100,000 granted in FY24 and even more applications in 2025. With so many new rights being created, companies need better ways to license and share them. Traditional systems - heavy paperwork, long negotiations, and delayed payments, cannot keep up. A modern licensing framework is becoming a necessity.

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How Blockchain Can Help

Semiconductor IP is complex. A single chip can include contributions from designers, foundries, and suppliers spread across countries. Licensing these rights involves many layers of agreements.

Blockchain can simplify this by creating a shared record of who owns what and under what conditions. Smart contracts - self-executing agreements written in code, can enforce rules automatically. For example, if a company uses a design beyond the agreed limit, the smart contract can stop further access or trigger a payment. This reduces disputes and makes rights management faster and more transparent.

India’s National Blockchain Strategy already highlights IP management as a key use case, showing that policy is aligned with these opportunities.

Currently, royalties are paid through fixed percentages with periodic reporting. This often leads to delays and disagreements, especially when chips are made in multiple places.

With blockchain, royalties can be tied directly to usage. When a batch of chips is produced, the smart contract calculates the payment and releases it automatically. This creates instant clarity for all parties.

Still, traditional contracts remain useful for complex cases that involve negotiation and exceptions. Smart contracts execute only what is coded, so errors or unforeseen scenarios can create problems. For now, a hybrid approach, using both written agreements and blockchain execution may work best.

Pilot Programs in 2025

These ideas are no longer just theory. In 2025, India and partners abroad began testing blockchain for semiconductor IP.

• The India Semiconductor Mission is piloting smart contracts for royalty distribution.

• State-level projects, like those in Gujarat, are using blockchain to manage IP access around fabs.

• Research facilities such as GlobalFoundries in Kolkata are exploring blockchain to secure design IP.

Early results are positive: disputes are being resolved faster, and companies report savings in both time and cost. Tata Electronics, now scaling up production, is also planning to integrate blockchain tracking into its workflow.

Problems Blockchain Solves

The main issue has been delays and confusion in multi-party licensing. Blockchain addresses this by providing a single, trusted record. If a breach occurs, access can be cut off automatically, reducing the need for lengthy court action.

For startups supported by DLI, blockchain makes it easier to join supply chains. They can license IP on fair terms and receive payments almost instantly, improving cash flow. Another benefit is stronger protection against counterfeit chips, a serious concern in global markets.

Moreover, as India establishes new fabs, a streamlined licensing process would help avoid unnecessary delays and cut-down the industry’s expenditure. Faster transactions with reduced disputes imply that projects will be executed in a more definite and organized manner. Even regulatory requirements, including patent reporting, can be made simpler through the automated mechanisms integrated with blockchain. This in totality, supports India’s broader economic goals and places the country in a stronger and more competitive position globally.

Regulatory and Legal Challenges

Nonetheless, there are challenges despite the promise. Mistakes may be difficult to correct once smart contracts are in place. India is still formulating laws on digital payments and tokens, particularly after the 2025 Finance Bill. Even the storage and sharing of licensing data remains a concern, as privacy and security must be protected.

Lawmakers and the judiciary must clearly define the role of smart contracts within the existing legal system. Transparency in rules or regulations regarding enforceability, liability, and tax considerations will be central to scaling these models.

Blockchain offers security, but it is not infallible. Threats include hacking, errors in access privileges, and the emerging risks of quantum computing. Prevention is particularly essential in India, where court cases are time-consuming.

To address these risks, pilot projects are testing hybrid systems: some data stored on-chain in safety-critical environments, and some off-chain in secure environments. This strikes a balance between confidentiality and auditability and offers safety nets in case of errors.

Conclusion: From Bottleneck to Growth Driver

History of India’s semiconductor growth is closely tied to IP Licensing. The traditional systems will not be sufficient as the number of patents and scale of projects continue to rise. With blockchain, rights can be managed more reliably and efficiently through smart contracts.

 Pilot projects reveal that this approach can same time, reduce disputes and provide start-ups fair opportunities. Yet, its success depends on robust security, overt regulation and, hybrid models that integrate automation with conventional law. When implemented properly, licensing will not hinder India’s semiconductor ambitions, it will instead strengthen them.

Author: Amrita Pradhan, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

References

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2.     India Semiconductor Mission, Design Linked Incentive Scheme, https://ism.gov.in/.

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