PLI scheme a signal boost for telecom sector, Crisil

Introduction of the production-linked incentive (PLI) scheme, together with enhanced technology support led by the adoption of open radio access network (RAN) and investments in 5G telephony, is expected to ring in a course reversal for Indian telecom companies (telcos), which have been largely import-dependent and reliant on global vendors for their network roll-outs.

So far, imports have accounted for 75-85% of the total telecom equipment market. While some global vendor shave their manufacturing bases in India, majority of equipment has been imported from East-Asian countries suchas China, Malaysia, South Korea, and Vietnam.

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The nascent domestic equipment industry, on its part, has been catering mainly to public sector undertakings(PSUs).

All that is expected to change now, with the government extending the PLI scheme to the telecom equipmentsector to boost domestic manufacturing and attract investments in the target segments of telecom and networkingproducts.

Under the scheme, 10 MSMEs and 10 non-MSMEs (of which at least three are domestic companies) will be shortlisted on the basis of their investment commitment. The shortlisted companies will then receive incentives for incremental sales generated over the base year, fiscal 2020.

The government has earmarked ~Rs 12,200 crore for the scheme, and expects investments of ~Rs 3,000 crore,with an incentive to capex ratio of 4:1, which is the highest among all PLI schemes. CT Bureau