Govt clears PLI scheme for telecom equipment; here’s what it means for the sector

In a bid to boost manufacturing in India, the Union Cabinet has cleared the way for a production-linked incentive (PLI) scheme for the telecom equipment sector to the tune of Rs 12,200 crore.

Announcing the scheme, Telecom Minister Ravi Shankar Prasad said that the government expects an incremental production of over Rs 2.4 lakh crore in the telecom equipment sector. This includes nearly Rs 2 lakh crore in exports along with 40,000 new jobs. Government is also expecting Rs 17,000 crore in tax revenue.

Detailing the contours of the scheme, Telecom Secretary Anshu Prakash said, “We have Rs 12,195 crore. We will be issuing the guidelines and inviting applications and the base year will be 2019-2020 because that was a normal year. From April 1 applications will be invited.”

Prakash said that the applications will be reviewed by a committee. The committee will examine the commitments of investments made.

“For MSME, the minimum incremental investment will be Rs 10 crore and for non-MSME, which are the bigger companies, the minimum incremental investment will be Rs 100 crore. Once the investment is made, we will calculate the incentive which will be available. This will be spread over 5 years,” he explained in an interview to CNBC-TV18.

Reacting to the scheme, Pankaj Mohindroo, Chairman of the Cellular and Electronics Association said that manufacturing in the telecom equipment sector has shrunk. However, he believes that the PLI scheme will be a strong beginning and will create magic for the economy.

“Telecom equipment has been a huge laggard in manufacturing and manufacturing over the years in this sector has just shrunk. So, the PLI scheme is very deft. It is very good beginning; we will see a lot of development and research, and India emerging as strong player in telecom equipment’s,” he said.