Global, local majors line up for telecom gear PLI

Leading global telecom equipment manufacturers, Cisco, Nokia, Ericsson, Jabil, and contract manufacturer Flex and Foxconn are likely to apply for the Rs 12,195-crore production-linked incentive scheme for the sector, announced by the government last week.

Industry sources said formal applications from these manufacturers were likely once the department of telecommunications announces the final guidelines. Tejas Networks and HFCL are among the local players that have evinced interest; the government is expecting more to follow suit.

The guidelines will specify how many global and local players would be selected. For the mobile phones PLI scheme, five global and five local companies have been chosen. The PLI scheme for telecom equipment is designed to offer incentives, to the chosen firms, for incremental production over the base year.

Through such incentives, the government is aiming to reduce imports, boost domestic production, increase employment and export competitiveness.

The scheme, which would be operational from April 1, would lead to incremental production of around Rs 2.4 lakh crore with exports of around Rs 1.95 lakh crore over five years. Sources in the government said the scheme is expected to create 40,000 jobs, revenues of around Rs 8,500 crore in direct taxes and Rs 8,700 crore in indirect taxes like GST. It is expected to bring in investments of over Rs 3,000 crore.

Telecom equipment that would be covered includes core transmission equipment, 4G/5G next generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers etc.

The scheme is expected to offset huge imports of telecom equipment worth more than Rs 50,000 crore and reinforce it with Made in India products both for domestic markets and exports.

The selected companies would be eligible for incentives subject to achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods. The incentive structure ranges between 4 and 7% for different categories and years. For MSMEs, 1% higher incentive is proposed in year 1, year 2 and year 3. Financial Year 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes. Fiscal 2021 has not been taken as a base year because of lower production during the year due to the pandemic.

The minimum investment threshold for MSMEs has been kept at Rs 10 crore and for others at Rs 100 crore.
The upcoming 4G tender of BSNL would provide a perfect opportunity for the firms to expand their manufacturing capacity in India. The government has already decided that core network for BSNL’s network would be provided by an Indian company.