Cabinet approves over Rs 12,000-crore PLI scheme for telecom sector

Scheme on telecom products will be implemented from April 1

Following the launch of a production-linked incentive (PLI) scheme for manufacturing, India on Wednesday launched the scheme for telecommunications (telecom) and networking products, with an outlay of Rs 12,195 crore over five years.

The Cabinet approved PLI for manufacturing telecom equipment, including core transmission equipment, 4G/5G next-generation radio access network and wireless equipment, access and customer premises equipment, Internet of Things-access devices, other wireless equipment, and enterprise equipment like switches, routers, etc.

The scheme will be operational from April 1 this year. The eligibility for the scheme will be subject to achieving a minimum threshold of cumulative investment and incremental sales of manufactured goods, said the Ministry of Communication and Information Technology in a statement.

2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes, it added.

The scheme also has higher proposed incentives for micro, small and medium enterprises (MSMEs). For MSMEs, the government has proposed 1 per cent higher incentive in the first three years. The minimum investment threshold for MSMEs has been kept at Rs 10 crore; for others, at Rs 100 crore.

An investor who qualifies for the scheme will be incentivised up to 20 times the minimum investment threshold, enabling them to utilise their unused capacity, said the government statement.  

Many international players are keen to come to India and we will encourage them, including domestic manufacturers, said Ravi Shankar Prasad, Electronics & IT minister

The move is part of a previously planned expansion of the PLI scheme’s success in mobile devices and electronic components, medical devices, and active pharmaceutical ingredients. The Cabinet had, in November, earmarked Rs 1.46 trillion for the incentives to be expanded into 10 industries, including automobile and components, telecom equipment, laptops and personal computers, air conditioners (ACs), and electric batteries, within 45 days.

Union Finance Minister Nirmala Sitharaman declared Rs 1.97 trillion worth of sops as part of the PLI scheme in the Union Budget 2021-22 this year, and the government expanded it to include televisions, ACs, and food processing.

Telecom Minister Ravi Shankar Prasad said on Wednesday while launching the scheme for telecom equipment that the Centre was positioning India as a global hub for manufacturing and had created a conducive environment for the ease of doing business.

The industry welcomed the move.

“We congratulate the government on the recently approved PLI for telecom equipment manufacturing. Initiatives like these will help India position itself as a manufacturing hub of the world. This will open up many opportunities to manufacturers. India will see companies moving their supply chains here, and truly become atmanirbhar. At the same time, it is also important to take steps towards moving component manufacturing to India,” said George Paul, chief executive officer of industry body Manufacturers’ Association for Information Technology.

Spurred by the incentives provided under PLI last year, global brands such as Apple Inc, through its vendors, and Samsung lined up to participate in the scheme, which offered incentives of 4-6 per cent for five years on mobile phones priced over $200, provided companies committed to incremental investment and production every year. It considers 2020 as the base year.

The government hopes to find similar success in other areas by providing similar incentives for boosting manufacturing of mobile devices.

“We welcome the government’s progressive PLI norms to boost local manufacturing of telecom equipment and build India as a global manufacturing hub. Nokia is already making in India a range of telecom equipment, from 2G to 5G, for domestic as well as global markets. We hope these incentives will give the right impetus to telecom manufacturing ecosystem in the country,” said a spokesperson for Nokia.

The PLI scheme for mobile manufacturing was set in motion, with 16 project approvals last July. According to internal estimates, the scheme, if successful, has the potential to raise local value addition for feature phones to 70-80 per cent and for smartphones to over 35 per cent.