The Department of Telecommunications or DoT on Thursday started accepting applications for telecom equipment and networking products manufacturers to apply for the PLI or production-linked incentive scheme under which ten large manufacturers, as well as ten MSMEs, will be chosen to receive incentives.
As per the guidelines released on Thursday, Rs 12,195 crore will be disbursed as incentives to the ten qualifying companies in a five year period by achieving stipulated production targets. Out of this amount, Rs 1000 crore has been set aside for the ten MSMEs, three of which will be domestic.
In case you missed it, back in April, the DoT had announced that companies like Ericsson and Nokia have been keen on expanding their existing operations in the country for global supply chains.
Meanwhile, Samsung, Ciena, Cisco and certain engineering-manufacturing service companies such as Jabil USA, Foxconn Taiwan, Sanmina USA, and Flex USA have shown amounts of interest when it comes to setting up manufacturing units in India.
Furthermore, local companies such as HFCL, Coral Telecom, Sterlite, Dixon and VVDN Technologies have the plan to expand their facilities. Bharti Enterprises has also said that it is forming a joint venture with Dixon in order to make telecom equipment as well as avail the benefits that are part of the scheme.
What Do The Guidelines State
According to the guidelines, non-MSMEs will also be eligible for incentives, ranging from a percentage of 4- 6% of incremental production in a year. The scheme offers a higher incentive of 4-7% to enterprises that are micro, small and medium, with an investment requirement of Rs 10 crore, whilst large companies have been provided with a threshold of Rs 100 crore.
In terms of the duration, FY19-20 will be set as the base year, with the five year period beginning from April 1, 2021. The last date to apply is set for July 3, 2021. The scheme will cover products like 4G/5G next-generation radio access networks, customer premises equipment, IoT related products, routers and switches.
The applications will be shortlisted from highest to lowest, on the basis of committed cumulative incremental investment during the scheme period. The investor must also achieve net incremental sales that are equivalent to three times the amount invested in that year to qualify for incentives. The upper ceiling for these targets is topped at 20 times the amount that will be invested.
Talking about this, Lt. General Dr SP Kochhar from COAI stated that the body welcomes the issuance of detailed guidelines on implementation of the PLI scheme on telecom and networking equipment by DoT.
Telecom is the backbone of a digitally connected India and this initiative will also boost local manufacturing, exports and also create employment opportunities. In terms of numbers, India is already the second largest telecom market globally and this will go a long way in making the country a global hub for telecom innovation.
TEMA also complimented the Govt. stating that it is going to be a Landmark happening for Make in India in telecom. TEMA further complimented how this has come at the most appropriate time when the domestic industry is geared up for starting manufacturing within India. It is particularly happy that the threshold limits for investment are quite reasonable at Rs 10.00 Crores for MSME and Rs 100 crores for non-MSME.