The Union Cabinet, chaired by the Prime Minister, Narendra Modi, has approved the Production Linked Incentive (PLI) Scheme for telecom and networking products with a budgetary outlay of Rs 121.95 billion.

The PLI Scheme intends to promote the manufacture of telecom and networking products in India and proposes a financial incentive to boost domestic manufacturing and attract investments in the target segments of telecom and networking products in order to encourage Make in India. The scheme will also encourage exports of telecom and networking products ‘Made in India’.

Support under the Scheme will be provided to companies/entities engaged in the manufacturing of specified telecom and networking products in India. Eligibility will be further subject to achievement of a minimum threshold of cumulative incremental investment over a period of four years and incremental sales of manufactured goods net of taxes (as distinct from traded goods) over the Base Year 2019-2020. The cumulative investment can be made at one go, subject to the annual cumulative threshold as prescribed for four years being met.

Globally telecom and networking products exports represent a $100 billion market opportunity, which can be exploited by India. With support under the scheme, India will augment capacities by attracting large investments from global players and at the same time encourage promising domestic champion companies to seize the emerging opportunities and become big players in the export market.

In continuation of “Atmanirbhar Bharat-Strategies for enhancing India’s Manufacturing capabilities and enhancing exports”, this scheme is part of the umbrella scheme approved by the cabinet in November 2020 for implementation of PLI under various Ministries/ Departments including the Department of Telecommunications (DoT). There will be a minimum investment threshold of Rs 100 million for MSME with incentives from 7 to 4 per cent and Rs 1 billion for others with incentives from 6 to 4 per cent over 5 years above base year. The applicants with higher investments than the specified threshold under MSME and Non-MSME categories will be selected through transparent process.

With this scheme, India will be well-positioned as a global hub for manufacturing of telecom and networking products . Incremental production of around Rs 2 trillion is expected to be achieved over 5 years. India will improve its competitiveness in manufacturing with increased value addition.

It is expected that the scheme will bring more than Rs 30 billion investment and generate huge direct and indirect employments.

Through this policy, India will move towards self-reliance. By incentivising large-scale manufacturing in India, domestic value addition will increase gradually. Provision of higher incentive to MSME will encourage domestic telecom manufacturers to become part of the global supply chain.

Commenting on the development, Lt. Gen Dr. S.P. Kochhar, Director General, Cellular Operators Association of India (COAI), said, “We welcome the implementation of the PLI scheme on telecom equipment. Telecom is the backbone of a digitally connected India and this initiative will further boost local manufacturing and create employment opportunities. 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.”

Meanwhile, Tony Verghese, Partner, J Sagar Associates, said, “The approval of the PLI scheme for telecom equipment manufacturing by the Union Cabinet earlier today, is a significant boost for product manufacturing in the telecom sector. With the launch of 5G technology in the anvil, this will definitely prove to be an impetus for the ‘Make in India’ campaign of the Government and encourage local production including boosting more collaborations and technology transfers in the sector. With the telecom industry going through a very difficult phase, this move of the Government would surely incentivise the telecom service providers by opting for equipment’s manufactured locally savings on a substantial costs relating to imports. While we need to wait and see, as to whether there will be many takers to this scheme, surely it appears that these developments are on the right path towards Atmanirbhar or self-sufficiency.”