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DoT issues operational guidelines for PLI Scheme for telecom gear manufacturing

The Department of Telecommunications has issued the operational guidelines for the Production Linked Incentive (PLI) Scheme yesterday, June 3, 2021. The original Scheme announced on February 24, 2021 has been tweaked after extensive consultations with stakeholders.

As part of the detailed guidelines, only 15 per cent of the expenditure on R&D and 5 per cent of that incurred in transferring technology will be considered investment for determining eligibility under the scheme. The threshold investment is a key element that determines the financial incentive that a company will be eligible for under the scheme. The investment threshold for overseas companies has now been brought down to Rs 100 crore for all non-MSMEs from the previous Rs 300 crore.

The scheme envisages to create global champions out of India who have the potential to grow in size and scale using cutting edge technology and thereby penetrate the global value chains. Telecom products play an important role in the larger vision of “Digital India”.

The PLI Scheme will be implemented within the overall financial limits of ₹ 12,195 crores only for implementation of the Scheme over a period of 5 years. For MSME category, financial allocation will be ₹1000 Crores.

Small Industries Development Bank of India (SIDBI) has been appointed as the Project Management Agency (PMA) for the PLI scheme.

Since the scheme was effective from April 1, 2021, investment made by successful applicants in India from April 1, 2021 onwards and up to Financial Year (FY) 2024-2025 are eligible, subject to qualifying incremental annual thresholds. The support under the Scheme shall be provided for a period of five (5) years, i.e. from FY 2021-22 to FY 2025-26.

The Scheme is open to both MSME and Non-MSME Companies including domestic and global companies. Also, manufacturers with products with Indian technology are encouraged to apply.

Interested eligible applicants can start the registration process for the Scheme from June 4, 2021 at The Application window shall be open for 30 days i.e. up to July 3, 2021.

Applicants will have to satisfy the minimum revenue criteria to be eligible under the Scheme. The company may decide to invest in single or multiple eligible products. The Scheme stipulates a minimum investment threshold of ₹ 10 crores for MSME and ₹ 100 Crores for non MSME applicants. Land and building cost will not be counted as investment. Eligibility shall be further subject to Incremental Sales of Manufactured Goods (covered under Scheme Target Segments) over the base year (FY2019-20).

DoT shall grant approvals to 10 (ten) eligible applications each in MSME & non-MSME categories. Out of the 10 applications in non-MSME category, at least three applicants will be eligible domestic companies. The applications will be short listed from highest to lowest on the basis of committed cumulative incremental investment during the Scheme period.

It is estimated that full utilisation of the Scheme funds is likely to lead to incremental production of around ₹ 2.4 lakh crores with exports of around ₹ 2 lakh crores over 5 years. It is also expected that Scheme will bring investment of around ₹ 3,000 crore and generate huge direct and indirect employment. This is in line with the larger objective of Make in India.

Ericsson and Nokia have expressed their keenness to expand their existing operations in India for global supply chains, while Samsung, Cisco, Ciena and Jabil USA, Foxconn Taiwan, Sanmina USA, and Flex USA have also shown interest in setting up manufacturing units in India.

Indigenous manufacturers as HFCL, Coral Telecom, Sterlite, VVDN Technologies and Dixon Technologies also plan to expand their facilities. Dixon has already announced a joint venture with Bharti Enterprises to manufacture telecom gear in India.

Industry Responds
“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,” SP Kochhar, Director General, COAI.

“The best thing about the scheme is that it’s fully WTO complaint. It’s not only beneficial to MNCs investing in India but also Indian large industry and MSME enterprises too. The scheme requires IoT and thus will emerge huge manufacturing capabilities in equipment, electronics, radio and optical systems. As we build the complete supply chains from components to PCBs to radios and mobile phones and the emerging IoT products in India, we shall integrate with the global supply chains but more importantly the Scheme shall be foreign exchange positive.” Sandeep Aggarwal, Chairman, TEPC

“This is going to be a landmark happening for the Make in India initiative for telecom. TEMA compliments for the out-of-the-box initiative to reserve three applicants in each category only for domestic companies.” NK Goyal, Chairman, Emeritus, TEMA.

“With the already reduced income-tax rate for domestic manufacturing companies, the announcement of the PLI scheme will make India a lot more manufacturing friendly destination,” Ritesh Kumar, Partner, IndusLaw.

CT Bureau

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