Govt may extend telecom PLI by one year

The government may extend the production-linked incentive (PLI) scheme for telecom equipment manufacturing by one year, as around 16 medium and small firms are yet to submit their investment plans and are not likely to meet production targets for the current fiscal year.

There are also firms that have committed investments, but are not likely to meet production targets due to supply chain issues. On October 14, the government had launched the PLI scheme for telecom manufacturing, under which 31 global and local companies were selected to undertake incremental production worth Rs 1.82 trillion over five years. But so far, 15 companies have given their investment plans, while the remaining 16 are still in the process of doing so. Since many of these firms are mid-size or small companies, raising money, especially during the pandemic, has been difficult.

“SMEs have been hit hard by the pandemic, so we will give them time, and if necessary, also extend the scheme time. We extended the time for mobile phones as well,” said an official, adding that any decision on the extension will be taken after evaluation this month or in May.

In November-December, several local firms had written to the Department of Telecommunications (DoT), seeking an extension of one year. Apart from individual firms, industry body Cellular Operators’ Association of India (COAI) had also sought an extension of one year on account of shortage of semiconductors as well as supply chain delays.

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, 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 and 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. The scheme offers incentives 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