DoT bats for expanded telecom PLI to push diversified manufacturing

The Department of Telecommunications (DoT) is pushing for an expansion of the Production Linked Incentive (PLI) scheme for telecom equipment and network products to further localise the manufacturing of key equipment and quickly capture the export demand for 4G and 5G gears.

 

An expanded PLI will be a key ask for the DoT during the upcoming pre-Budget inter-ministerial consultations, set to begin soon, officials said, adding that the scheme has to be updated to attract fresh funding.

 

As of September end, the 42 PLI beneficiaries have already invested Rs 3,925 crore of the 4,115 crore they had initially committed. A total of 24,980 jobs have been created out of the promised 44,000, and the DoT aims for higher job numbers as part of a revamped scheme, officials said.

   

According to the DoT, India has achieved 60 per cent import substitution in telecom products under the PLI scheme and has become almost self–reliant on antennas, Gigabit Passive Optical Network gear, which allows point-to-multipoint networks using single optical fiber lines, and customer premises equipment (CPE) such as internet of things (IoT) devices. 

 

To export a full range of indigenously-designed 4G and 5G stacks in 2024 remains an ongoing target. "While outbound shipments of optical equipment, switches, and routers are growing, which have a high demand globally, more support is needed to quickly capture demand in key countries experiencing 5G rollouts," an official said.

This is part of India's policy to attract investments and use technological outreach as a key foreign policy bet. Several countries such as Kenya, Mauritius, Papua New Guinea, and Egypt, among others, have shown interest in the Indian telecom technology.

 

Initially launched in 2021 with a financial outlay of Rs 12,195 crore for 5 years, the PLI encompasses 42 companies including 28 micro, small and medium enterprises (MSMEs). It covers core transmission equipment, 4G/5G equipment such as next-generation Radio Access Network (RAN) and wireless gear, access & CPE gears and enterprise equipment such as switches and routers.

 

Terms & conditions

Stakeholder consultations on expanding the PLI will soon begin, sources said. The companies had earlier complained about stiff incremental and production targets for the first year of 2021-22. Currently, applicants have to satisfy the minimum global revenue criteria to be eligible under the scheme. Companies can invest in single or multiple eligible products.

 

The scheme stipulates a minimum investment threshold of Rs 10 crore for MSMEs and Rs 100 crore for non-MSME applicants. Land and building costs will not be counted as investment. The eligibility is also subject to higher sales of manufactured goods over the base year (FY19-20). The allocation for MSMEs has also been enhanced from Rs 1,000 crore to Rs 2,500 crore. 

Vodafone to sell 3% stake in Indus Towers for ~2,840 cr

 

British Telecom giant Vodafone PLC will liquidate its holdings in mobile tower infrastructure company Indus Towers, selling its remaining 3 per cent stake. Pegged at ~2,840 crore, the transaction will allow Vodafone to repay its outstanding borrowings of $101 million to Vodafone's existing lenders, secured against Vodafone's Indian assets, Indus Towers informed the exchanges.

 

Vodafone will sell its remaining 79.2 million shares in Indus Towers through an ‘accelerated bookbuild offering’, it said.  

Back in June, Vodafone had sold 484.7 million shares or a hefty 18 percent stake in Indus Towers in block deals, and raised ~15,300 crore. The security package agreed upon during the merger of erstwhile Bharti Infratel and Indus Towers, stipulates that Vodafone Plc’s 21 per cent stake in Indus Towers was the primary pledge by its lenders against the $1.4 billion loan Vodafone Pic had taken in 2019 to participate in Idea’s rights issue. Indus Towers has a secondary pledge on Vodafone PLC’ original 21 per cent stake, J P Morgan said in June.

  “Under the terms of the security arrangements between Vodafone and Indus, Indus has a security over the residual proceeds from a placing to guarantee obligations from Vodafone Idea to Indus under the Master Services Agreements (MSA). The proceeds from the capital raise would be used by Vi to pay outstanding MSA dues to Indus,” the filing said.

  The announcement came after the markets closed. Shares of Indus Towers rose 1.46 per cent to ~358.7 in intraday trade on Wednesday.