To be operational from April 1, the scheme would lead to incremental production of Rs 2.4 lakh crore with exports of around Rs 2 lakh crore over five years
The Union Cabinet on Wednesday approved a Rs 12,195-crore production-linked incentive (PLI) scheme for telecom equipment manufacturing in the country, which like the one approved for mobile phones earlier, is designed to offer incentives to the chosen firms for incremental production over base year. Through such PLI schemes, the government is aiming to reduce imports, boost domestic production, increase employment and export competitiveness.
The scheme, which would be operational from April 1, would lead to incremental production of around Rs 2.4 lakh crore with exports of around Rs 2 lakh crore over five years. The scheme is expected to bring investment of over Rs 3,000 crore and generate huge direct and indirect employment and taxes both, an official statement said.
Telecom equipment which would get covered under the scheme, includes core transmission equipment, 4G/5G next generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers, etc.
Global companies which would qualify for the scheme are the likes of Ericsson, Nokia, etc, while domestic firms would be the state-owned ITI and a host of smaller players. However, unlike the mobile phone scheme, the government has not stated how many global and local firms would be shortlisted for the scheme. It just said the, “government desires MSMEs to play an important role in the telecom sector and come out as national champions”. For mobile phones, five global and five local firms were selected.
Communications and IT minister Ravi Shankar Prasad said that the government is positioning India as a global powerhouse for manufacturing, and has created a conducive environment for ease of doing business. “The Cabinet has approved PLI for telecom sector…to ensure further progress of make-in-India in the telecom equipment space…5G equipment will also come…so it was important to give incentives. We held widespread consultation with stakeholders,” Prasad said, adding that the scheme also aims to promote MSMEs in “Aatmanirbhar Bharat”.
The scheme is expected to offset huge imports of telecom equipment worth more than Rs 50,000 crore and reinforce it with Made in India products both for domestic markets and exports, the official statement said.
The new scheme has an outlay of Rs 12,195 crore over five years, and its eligibility will be subject to achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods. The incentive structure ranges between 4 and 7% for different categories and years. For MSMEs, 1% higher incentive is proposed in year 1, year 2 and year 3. Financial year 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes. The fiscal 2021 has not been taken as a base year because of lower production during the year due to the pandemic.
The minimum investment threshold for MSMEs has been kept at Rs 10 crore and for others at Rs 100 crore. “Once qualified, the investor will be incentivised up to 20 times of minimum investment threshold enabling them to utilise their unused capacity,” the statement said. Prasad said that government will soon come up with a PLI scheme to encourage production of laptops and tablet PCs.