The Union cabinet on Wednesday expanded the production-linked incentive (PLI) scheme for telecom and networking industry with a budget of Rs 12,195 crore. The PLI scheme looks to promote the telecom and networking industry in India by offering a financial incentive to boost domestic production and attract investments.
Companies engaged in production of specified telecom and networking products in India will be eligible for the PLI benefits, subject to achievement of a minimum threshold of cumulative incremental investment over four years and incremental sales over the base year 2019-2020.
Move prompted by PLI scheme success in mobiles
The cabinet approval is prompted by the success of PLI scheme in mobile and component manufacturing, which was unveiled in April last year. The government expects the scheme to bring in more than Rs 3,000 crore in investment, generating a large number of direct and indirect jobs. The government finalised this scheme in consultation with stakeholders like manufacturers, industry leaders and associations. It looks to offset telecom equipment imports worth Rs 50,000 crore.
The global market for telecom and networking products is worth $100 billion. The scheme will help India expand manufacturing capacity with the help of large-scale investments from global players, while helping domestic firms to become big players in the global market. The scheme will position India as a global manufacturing hub for telecom and networking products.
PLI scheme for telecom in line with Atmanirbhar Bharat
The extension of PLI scheme to telecom and networking industry is part of the scheme cleared by the Union cabinet in November 2020. The scheme is in line with the Atmanirbhar Bharat plan to boost India’s manufacturing output and exports.
The minimum investment threshold for the scheme is Rs 10 crore for MSMEs and Rs 100 crore for other firms over a 5-year period from base year. The applicants with higher investments than specified threshold under MSME and Non MSME categories will be selected through a transparent process.
Indian mobile phone manufacturing sector is one of the success stories of the Narendra Modi government’s Make in India initiative. It has expanded at an annual rate of 6.66% in volumes and 6.54% in value terms between 2007 and 2018. India is now the second largest market for mobile phones behind China.
The Modi government has created a favourable policy environment for mobile manufacturing. Its flagship programme Make in India launched in 2014 is a major factor behind the success of the domestic mobile manufacturing industry.