India is the world’s second largest telecom market with 765.1 million broadband customers. In India, the telecom sector employs to 4 million people directly and indirectly and constitutes 7% of all foreign direct investment (FDI) inflows in the country. The Government of India has launched the Production Linked Incentive Scheme for Telecom and Networking Products to encourage large-scale investments in telecom equipment manufacturing and expand local production capacity.
The Production Linked Incentive (PLI) Scheme is a financial incentive designed to encourage local production and attract investments in the Telecom and Networking Products target industries. Over the next five years, it is expected that full use of the Scheme funds will result in incremental production of roughly 2.4 lakh crores and exports of around 2 lakh crores. The Scheme is also estimated to bring in over 3,000 crores in investments and create a large number of direct and indirect jobs. This is in keeping with the greater Make in India goal.
Major accomplishment in PLI being implemented by Department of Telecommunications (DoT):
On February 24, 2021, the Department of Telecommunications announced the PLI Scheme for Telecom and Networking Products, with a cash investment of Rs. 12,195 crores spread over five years. PLI in Telecom and Networking Products will turn India into a global hub for telecom equipment manufacturing, including Core Transmission Equipment, 4G/5G Next Generation Radio Access Network and Wireless Equipment, Access & Customer Premises Equipment (CPE), Internet of Things (IoT) Access Devices, Other Wireless Equipment, and Enterprise equipment such as switches and routers.
The investor will be rewarded for incremental sales of up to 20 times the pledged investment, allowing them to expand globally, use under utilised capacity, and increase production. The main goal of this scheme is to counteract the massive import of telecom equipment worth more than Rs. 50 thousand crores by bolstering the local and foreign markets with "Made in India" items. India's goal is to become a favoured worldwide manufacturing site for telecom devices, as well as a net exporter of telecom and networking equipment.
Product responses from major industry leaders:
The majority of global telecom industry leaders are eager to grow or establish manufacturing bases in India, and they are pleased with the incentives given in the Scheme. Companies such as Ericsson Sweden and Nokia Finland want to extend their current operations in India for global supply chain purposes.
Global telecom companies such as Samsung South Korea, Cisco USA, Ciena USA have shown interest in establishing manufacturing facilities in India for telecom and networking products for both domestic and export markets. VVDN Technologies Gurugram, Dixon Noida, HFCL, Coral Telecom, and Sterlite are among the Indian companies that have expressed interest in the scheme.
How to expand your global reach:
With the help of the Invest India team, an intensive outreach effort for the Scheme is being organised, which will include:
One-on-one meetings with potential investors;
Participation in industry association-sponsored global outreach events;
Webinars with consultants and officials from embassies, law firms, banks, research organisations, and industry associations creating collaterals/flyers in many languages for the programme;
On the Invest India website, there is a microsite for the initiative;
For the whole Scheme interface, there is a separate interactive website for applications as well as chosen suppliers;
Translation of the scheme into several languages is supported.
What type of value addition will the PLI provide-New types of industries, encouragement to MSMEs/ ancillarisation and so on:
The scheme is investment-linked, allowing vendors to invest in backward integration and thereby boost value addition in the country. Global vendors will bring in component suppliers and build add-ons. MSMEs play a vital part in the telecom manufacturing eco system, and the plan includes a unique category for them. In the first three years, a one percent (1%) greater incentive is recommended for MSMEs. For MSME, the minimum investment requirement has been set at Rs. 10 crore.
Expected outcomes include increased in investment, production, exports and employment:
Over a five-year period, it is expected that full use of the Scheme funds will result in incremental output of roughly 2.4 lakh crore and exports of around 2 lakh crore. It is also predicted that the Scheme will attract over 3,000 crores in investment and create a large number of direct and indirect jobs.
The company engaged in manufacturing of specified telecom and networking products in India will be eligible for the said scheme. Further the eligibility is subject to the achievement of minimum threshold of cumulative incremental investment over a period of four years and incremental sales of manufactured goods net of taxes (as distinct from traded goods) over the base year 2019-2020.
Specified Telecom and networking products
Description of Goods
Core Transmission Equipment:
Dense Wavelength Division Multiplexing (DWDM), Optical Transport Network (OTN), Multi Service Provisioning Platform (MSPP), Synchronous Digital Hierarchy (SDH), Packet Transport Network (PTN)/ Multi-Protocol Label Switching (MPLS), Gigabit Passive Optical Networks (GPON)/ Next-Generation- Passive Optical Network (NG-PON) Optical Line Terminal (OLT), Digital Microwave Radio
4G/5G, Next Generation Radio Access Network and Wireless Equipment:
4G/ Long Term Evolution (LTE)Radio Access Network (RAN) Base Station & Core Equipment; 5G RAN Base Station Core Equipment; Edge and Enterprise Equipment; Wireless Telecommunication Equipment in Access and Backhaul
Access & Customer Premises Equipment (CPE), Internet of Things (IoT) Access Devices and Other Wireless Equipment:
Unified Communications Platforms, IP Multimedia Subsystem, Soft Switch, GPON Optical Network Terminal (ONT), Wireless Fidelity Fibre To The Home (FTTH) etc.
(Wi-Fi) Access Point and Controller, LTE CPE, 5G CPE, Short Range: Devices and Associated Electronics in new technologies like 4G/5G/Enterprise equipment: Switches, Routers
Switches, Routers, Internet protocol (IP) and Packet Switching and Routing Apparatus
Quantum of Incentives
The applicable incentive for MSME will range 7% - 4% and for category other than MSME the applicable rate ranges from 6% to 4%. The incentive will be given subject to annual investment targets having been met