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Nokia on track to meet PLI targets

Big multinational vendors like Nokia and Ericsson are on track to meet targets of the first year of the production-linked incentive (PLI) scheme for telecom and network equipment manufacturing, and do not need any extension of timelines.

Comments of senior Nokia and Ericsson executives, who did not want to be named, come days after a number of domestic and multinational contract manufacturers wrote to the telecom department directly and through the Cellular Operators Association of India (COAI), seeking one year’s extension to meet targets under the PLI. The scheme began on April 1 and lasts until 2025-26.

But not all vendors agree to the COAI’s views. “We haven’t sought any extension and were not represented by the COAI in the recent letter to the DoT. Our investment plans are on track and we will easily meet the targets for the first year,” a senior Nokia executive told ET on the condition of anonymity. People familiar with the matter said that the letter was pushed by players like Dixon, which is a partner of Bharti, along with Flex and Cisco and other smaller domestic gear makers. “We have not raised any concerns through our partner Jabil. We are fine with the timelines,” a senior Ericsson executive said. Ericsson, Nokia, Dixon, Flex and Cisco didn’t respond to ET’s queries. Ericsson’s partner Jabil makes telecom equipment for the Swedish telecom gear maker through its facility in Pune. Jabil received the nod from the DoT in October.

One of the leading domestic telecom gear makers said that while making investments was not the issue, achieving the target is a challenge due to the ongoing supply chain disruption, which impacted the initial four months of the fiscal year. “The shortage is still going on and the notification came late, which is why we have sought an extension,” a senior executive said. “The industry is gradually recovering from the impact of the pandemic and we have yet not reached a point where demand for final products or supply chain for capital goods has stabilized. Overall, the first year of the scheme will prove to be challenging from a point of view of complying with the scheme parameters,” SP Kochhar, Director General of COAI said in his letter to the DoT. Kochhar said that the first year of any manufacturing project is most onerous from the point of view of recruitment of talent, skilling & training engineers, adoption to technology and of course building the core and support infrastructure.

“Synergies can only be realized starting the second year and built over a period of time. We request the DoT to consider either extending scheme window by a year from previous FY25-26 to FY26-27 or give option to bidder to choose one of two five-year windows either FY21-22 to FY25-26 or FY22-23 to FY26-27.” DoT had approved a total 31 proposals entailing an investment of Rs 3,345 crore over the next four-and-a-half years. The companies selected for the PLI scheme include Nokia India, HFCL, Dixon Technologies, Flextronics, Foxconn, Coral Telecom, VVDN Technologies, Tejas Networks, Akashastha Technologies and GS India. DoT notified the PLI scheme for telecom and networking products on February 24, 2021, with a financial outlay of Rs 12,195 crore over the five years. 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 one, year two and year three. Financial year 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes. Deeptech Central

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