The student has to be among top 1% scorers of that year's PSAT exam taken by the students.
Step-by-step explanation:
The selection index score varies from state to state and is used to select the semi finalists for the national merit program. Then from this SI score, the top 3-4% of the scorers on PSAT are selected. But all these do not proceed further for the national merit.
Then from these, the top 1% is taken out of that year's PSAT. This turns out to be around 16000 students every year. From these 16000, 8000 are given the national merit scholarship who have also scored well in the SAT exam and done well in the academic field.