Government has brought telecom equipment sector under the purview of production-linked incentive (PLI) scheme. The intent is to offset imports that amount to almost Rs 50,000 crore, and boost the growth of Micro, Small and Medium Enterprises (MSMEs) by giving preference to Made in India products.
Announcing the scheme, Telecom Minister Ravi Shankar Prasad said: “As a result of PLI scheme for telecom equipment, government hopes to have incremental production of Rs 2,44,200 crore in the sector, exports worth Rs 1,95,360 crore, 40,000 new jobs, and Rs 17,000 crore worth of tax revenue in the coming five years.”
The scheme will be operational from April 1, 2021 and it is expected to attract foreign direct investment to the tune of Rs 3,000 crore. It will cover core transmission equipment, Internet of Things (IoT) access devices, enterprise equipment such as switches and router, 4G/5G next-generation radio access network and wireless equipment, and access and customer premise equipment (CPE).
The eligibility for the scheme has been made subject to a business achieving a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes from 2019-20 onwards.
After qualifying for the scheme, the government promises that investors will be incentivised up to 20 times of the minimum investment threshold. Companies will be provided incentives up to 6 per cent of their initial investment over the first two years after their investment, up to 5 per cent till the fourth year and four per cent investment in the fifth year. For MSMEs, one percent higher incentive has been announced in year 1, year 2 and year 3.
The scheme has been tailored for greater participation from MSMEs otherwise as well, with small businesses being allowed to invest in more than one product category to meet the government’s minimum investment and sales criteria. The minimum investment threshold for MSME has also been kept lower at Rs 10 crore, while it remains Rs 100 crore for larger entities.
