PLI Scheme for Telecom and Networking Products in India

With 765.1 million broadband subscribers, India is the second-largest telecommunications market globally, providing employment to approximately four million individuals and accounting for 7% of all foreign direct investment (FDI) inflows in the country. To encourage substantial investments in telecommunications equipment production and increase domestic manufacturing capacity, the Indian government has launched the Production Linked Incentive Scheme for Telecom and Networking products.
 

Some Key Features of the Scheme are:

• The PLI scheme for telecom and networking products has a budgetary allocation of INR 12,195 crores over a period of five years.
• The scheme covers a wide range of telecom and networking products, including core transmission equipment, 4G/5G next-generation radio access network, and wireless equipment, among others.
• The Department of Telecommunications (DoT) is in charge of implementing the scheme in coordination with other government agencies.

 

Calculation of Incentives:

• The scheme offers different incentive rates for different categories of products and the level of incremental sales achieved. The incentive rates are higher for products with higher value addition and more advanced technology.
• The base year for calculating the incremental sales is 2019-2020, which means that eligible companies will be able to receive incentives for sales achieved over and above their base year sales.
• The incentive rates vary depending on the category of products and the level of incremental sales achieved. The incentive rates are higher for products with higher value addition and more advanced technology. The incentive rates are announced by the government and are subject to change from time to time.
• For example, if the incentive rate for a particular category of product is 6%, and the incremental sales for a particular year is INR 50 crores, the incentive payable for that year would be INR 3 crores (6% of INR 50 crores).

Eligibility:

• To be eligible for the scheme, MSME applicants must make a minimum investment of Rs. 10 crore, while non-MSME applicants must invest at least Rs. 100 crore.
• In addition, eligibility for the scheme will be dependent on the incremental sales of manufactured goods, which are covered under the target segments of the scheme, over the base year (FY20).

Overall Challenges Involved:

• Meeting the required criteria and targets may require significant investments in infrastructure, technology, and skilled manpower.
• The telecom and networking industry is subject to market volatility, with changing demand patterns, technological advancements, and regulatory changes. Companies may need to adapt quickly to these changes to remain competitive and meet the performance criteria under the PLI scheme. Companies may face challenges in finding and training suitable talent to adopt these technologies.
• Applying for and obtaining incentives under the PLI scheme requires a significant amount of time and resources. Companies may need to dedicate resources to complying with the scheme's documentation and verification requirements, which could divert their attention from other business activities.

 
PLI Scheme for Telecom and Networking Products provides incentives for eligible companies to increase their production capacity, invest in research and development, and adopt advanced technologies, recipients may face various challenges in meeting the scheme's performance criteria, remaining competitive in a volatile market, and investing in the necessary resources to achieve their goals.

 
To learn more about how to pitch for the PLI scheme, the process of application, disbursement of incentives, the key obligations of the recipient- CLICK HERE.