Telecom secretary Anshu Prakash has said the Production Linked Incentive (PLI) scheme for telecom equipment and networking products will be a “game changer” and the preliminary response from the industry has been very encouraging.
“The special features of the scheme include separate earmarking of funds for MSMEs and incentivizing sales up-to 20 times of minimum cumulative yearly investment for the purpose of benefits,” Prakash told ET, a day after the government released the guidelines for companies to avail benefits under the scheme.
Prakash said the registration portal was already open and a window of 30 days had been given for companies to apply.
The government released the guidelines under which 10 large companies and 10 MSMEs will be selected to receive sops, with the Centre hoping to attract investments of Rs 3,000 crore and spur local manufacturing worth Rs 2.4 lakh crore over five years.
According to the 25-page guidelines released by the Department of Telecommunications (DoT), a total of Rs 12,195 crore has been earmarked for applicants who can start applying from Friday with the last date being July 3. Of this, Rs 1,000 crore have been set-aside for the MSMEs. Out of the 10 non-MSMEs, at least three selected will be domestic manufacturers.
The scheme will cover products such as 4G/5G next-generation radio access networks, IoT devices, customer premises equipment, routers and switches.
In April, DoT had announced that Ericsson and Nokia were keen to expand their existing operations in India for global supply chains, while Samsung, Cisco, Ciena and engineering manufacturing service companies like Jabil USA, Foxconn Taiwan, Sanmina USA, and Flex USA have shown interest in setting up manufacturing units in India.
“As the first company to manufacture telecom equipment in India since 1994, we welcome the PLI scheme since it will boost the manufacturing eco system in the country,” Nitin Bansal, managing director, Ericsson India, said in a statement.
Local companies HFCL, Coral Telecom, Sterlite, Dixon Technologies and VVDN Technologies also plan to expand their facilities.
“We have formulated a plan to invest in manufacturing consumer premise equipment, switches and routers. Dixon has also announced a joint venture with Bharti Enterprises to manufacture telecom gear in India,” Sunil Vachani, executive chairman, Dixon Technologies had said.
Telecom Equipment Manufacturing Association (TEMA) said the scheme would result in Indian global champions, with Rs 1,000 crore being earmarked for the MSME category for the first time. TEMA has estimated that the scheme will result in incremental production for Rs 3 lakh crore over the next five years.
As per the guidelines, non-MSMEs will be eligible for incentives ranging from 4% to 6% of incremental production in a year. The scheme offers a higher incentive of 4%-7% to micro, small and medium enterprises that must invest Rs 10 crore, while large companies have an investment threshold of Rs 100 crore. FY19-20 will be treated as the base year, while the five-year period will begin from April 1, 2021.