Firms seek extension in telecom PLI scheme; Cabinet to take call

Sensing they might not be able to meet production targets for this fiscal (FY22) under the production-linked incentive (PLI) scheme for telecom equipment manufacturing, some companies have written to the department of telecommunications (DoT) for an extension by a year.

As per sources, apart from some individual firms, industry body Cellular Operators Association of India (COAI) has also sought an extension of one year. The primary reason for seeking an extension is shortage of semiconductor as well as supply chain delays due to the pandemic.

Sources in DoT confirmed to FE that they have received letters from some companies seeking extension but any decision regarding the issue can be taken only by the Union Cabinet. The DoT will put forward the proposal before the Cabinet soon. Earlier, the government had approved an extension for smartphone PLI scheme while a similar extension is also likely for IT hardware PLI scheme.

On October 14, the government had launched the PLI scheme for telecom manufacturing, under which 31 global and local companies would undertake incremental production worth Rs 1.82 lakh crore over five years.

The objective of the PLI scheme is to boost domestic manufacturing in the telecom and networking products by incentivising incremental investments and turnover with total outlay of Rs 12,195 crore. The scheme is effective from April 1, 2021. Investment made by successful applicants in India from April 1, 2021, onwards and up to FY2024-25 shall be eligible, subject to qualifying incremental annual thresholds. The support under the scheme shall be provided for a period of five years, ie from FY 2021-22 to FY 2025-26.

Notable companies selected under the scheme include Flextronics, Foxconn, Jabil, Nokia, Rising Star, Dixon Technologies, VVDN Technologies, Tejas Networks, HFCL, ITI, Coral Telecom, Lekha Wireless among others. Overall, a total of 31 companies, comprising 16 MSMEs and 15 Non-MSMEs (8 domestic and 7 global companies) have been selected.

As per commitments given by applicants, the companies are expected to invest Rs 3,345 crore in the next four years and generate incremental employment of more than 40,000 people. It is expected that an incremental production of around Rs 1.82 Lakh crore will happen over the scheme period. The scheme is expected to boost domestic research & development of new products on which 15% of the committed investment could be invested.

The scheme offers incentives in the range between 4% and 7% for different categories and tenures. For the MSMEs, a 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 minimum investment threshold for MSMEs has been kept at Rs 10 crore and for others at Rs 100 crore. Telecom equipment that 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, Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers, etc. Financial Express