India has already implemented a Production linked incentive Scheme in mobile phone manufacturing and received a good reception from the manufacturing companies. Now the canvas has been expanded in this segment with the announcement of PLI scheme in telecom and networking equipment manufacturing.
The scheme, cleared by the Union Cabinet, has an outlay of ₹12,195 crore over five years leading to enhanced production of more than ₹2 lakh crore.
In the coming 5 years we hope to have incremental production of ₹2.4 Lakh Crores, export worth ₹1.95 lakh Crores with 40,000 direct and indirect employment and tax revenue of ₹17,000 crore from telecom equipment manufacturing. pic.twitter.com/7eF1FYY0Eq
— Ravi Shankar Prasad (@rsprasad) February 17, 2021
The Objectives of PLI Scheme in Telecom Equipment Manufacturing
The PLI scheme intends to promote manufacture of Telecom and Networking Products in India, and proposes a financial incentive to boost domestic manufacturing, attract investments in the target sectors of telecom, and networking products to encourage Make in India. The scheme will also encourage exports of telecom and networking products ‘Made in India’.
Eligibility will be further subject to achievement of a 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. The cumulative investment can be made at one go, subject to annual cumulative threshold as prescribed for four years being met.
For MSMEs, 1 per cent higher incentive is proposed in the first three years, and the minimum investment threshold for them has been fixed at ₹10 crore. For others it is kept at Rs 100 crore.
The Benefits It Aims to Harvest
- It is expected that the scheme will lead to ₹2.4 trillion incremental production of telecom equipment in the country in the next five years.
- It is estimated to bring an investment of more than ₹3,000 crore and generate direct and indirect employment.
- Globally Telecom and Networking Products exports represent an US$100 billion market opportunity. India wants to gain the space after meeting the domestic requirement.
- The world is moving towards adopting 5G technology and there will be a need of range of equipment in the days to come. India, which is enabling private players to develop indigenous 5G, will benefit from the scheme in the long-run.
The Collective Picture That is Shaping
Start from the mobile phones that are so ubiquitous in our daily lives.
From just 2 mobile phone factories in 2014, India now has become the second largest mobile phone producer in the world. Production of mobile handsets in 2018-19 has reached 29 crore units worth ₹1.70 lakh crore from just 6 crore units worth ₹19,000 crore in 2014.
India’s production of electronics grew from USD 29 billion in 2014 to USD 70 billion in 2019.
Then came the PLI scheme in mobile manufacturing that took the story further.
Back in October 6, 2020, government cleared 10 companies for mobile phone PLI scheme. Another 6 companies were approved under the Specified Electronic Components Segment.
International mobile phone manufacturing companies like Samsung, Foxconn Hon Hai, Rising Star, Wistron and Pegatron got approval under the scheme.
Under the Mobile Phone (Domestic Companies) Segment, Indian companies including Lava, Bhagwati (Micromax), Padget Electronics, UTL Neolyncs and Optiemus Electronics have been approved.
Now, comes the PLI scheme in telecom and networking equipment.
Wait, there are other things that are shaping up too.
The government is expected to announce another PLI scheme to encourage the production of laptops, tablets, and personal computers.
Thus, India is evolving an ecosystem that seeks to transform the country into a giant force of electronic manufacturing.
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