Telecom manufacturing gets outlay of Rs 12195 crore over 5 years

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi, has approved Production Linked Incentive (PLI) Scheme for Telecom and Networking Products with a budgetary outlay of Rs. 12,195 crore.

The Production Linked Incentive (PLI) Scheme intends to promote 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 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 annual cumulative threshold as prescribed for four years being met.

Globally Telecom and Networking Products exports represent an US$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 Department of Telecommunications (DoT).

There will be a minimum investment threshold of Rs.10 crore for MSME with incentives from 7% to 4 % and Rs. 100 crore for others with incentives from 6% to 4 % over 5 year above Base Year. The applicants with higher investments than 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 around Rs. 2 Lakh crore is expected to be achieved over 5 years. India will improve its competitiveness in manufacturing with increased value addition.

It is expected that scheme will bring more than Rs. 3,000 crore investment and generate huge direct and indirect employments.

Through this policy, India will move towards self-reliance. By incentivizing 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.

Another initiative under Atmanirbhar Bharat – PLI scheme for telecom sector–Telecom manufacturing to get boost with outlay of ₹ 12195 Crores over 5 years leading to enhanced production of more than ₹ 2.4 Lakh Crores
­­­­­­­­­­­­­­­­­­­­Pursuant to the extraordinary incentive of PLI being provided by Government of India in various sectors, the Cabinet today has approved the Production Linked Incentive (PLI) Scheme for Telecom and Networking Products.

This approval comes in wake of very encouraging success of PLI related to mobile and component manufacturing, which was announced in April 2020 during the height of COVID pandemic. In spite of July 31, 2020 being the last date for applying, it received a resounding response. All major mobile component manufacturers of world are expanding their powerful footprints in India by making investments, starting exports and giving jobs to thousands of Indians.

Today’s Cabinet decision addresses another component of Atmanirbhar Bharat to make India a global hub of manufacturing telecom equipment including core transmission equipment, 4G/5G Next Generation Radio Access Network and Wireless Equipment, Access & Customer Premises Equipment (CPE), Internet of Things (IoT) Access Devices, Other Wireless Equipment and Enterprise equipment like Switches, Routers etc.

1. The scheme was finalized after widespread consultation with stakeholders like manufacturers, industry leaders and associations.
2. The core component of this scheme is to offset the huge import of telecom equipment worth more than Rs. 50 thousand crores and reinforce it with “Made in India” products both for domestic markets and exports.
3. The main features of this scheme are, as following: –
   1. The scheme outlay is Rs. 12,195 Crores over five years.
   2. The eligibility for the scheme will be subject to achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes.
   3. Financial Year 2019-20 shall be treated as the Base Year for computation of cumulative incremental sales of manufactured goods net of taxes.
   4. The incentive structure will be as below: –

1. 1. For MSMEs, one percent (1%) higher incentive is proposed in year 1, year 2 and year 3.
   2. Minimum Investment threshold for MSME has been kept at Rs. 10 Crores and for others at Rs. 100 Crores.
   3. Once qualified, the investor will be incentivized up to 20 times of minimum investment threshold enabling them to utilize their unused capacity.
   4. The Scheme will be operational from 1^st April 2021.
2. This scheme also addresses local manufacturing in MSME category because Government desires MSMEs to play an important role in the telecom sector and come out as national champions.
3. This scheme will lead to incremental production of around ₹2.4 Lakh Crores with exports of around ₹2 Lakh Crores over 5 years. It is expected that scheme will bring investment of more than ₹3,000 crore and generate huge direct and indirect employment and taxes both.

CT Bureau