AS MANY as 12 worldwide and home firms have submitted preliminary gives of funding to the Department of Telecommunications (DoT) below the telecom merchandise’ production-linked incentive (PLI) scheme, sources in know of the event mentioned.
Taiwan’s Rising Star, an arm of Foxconn, US-based Sanmina Corp, Jabil, Nokia, Samsung, Ciena, Mavenir USA and Ericsson are among the many worldwide firms, whereas Gurgaon-based VVDN Technology, Noida-based Dixon Technologies India, Coral Telecom and HFCL are the home firms which have proven curiosity thus far, sources mentioned.
All these firms fall below the non-micro, small and medium enterprises phase and shall be required to make a minimal funding of Rs 100 crore. In February this 12 months, the Central authorities had cleared a Rs 12,195-crore PLI scheme for home manufacturing of telecom and networking merchandise comparable to switches, routers, radio entry community, wi-fi tools and different web of issues (IoT) entry gadgets.
The working pointers for these firms had been notified on June 3. As per the norms, the 12 months 2019-2020 shall be thought of the bottom 12 months to calculate incremental gross sales for the PLI scheme, which is scheduled to run from April 1 this 12 months to March 31, 2026.
Though the federal government has agreed to think about the expenditure incurred on plant and equipment as funding for figuring out eligibility for the incentives below the PLI scheme, it has additionally restricted the quantity of the funds the businesses can spend on analysis and improvement (R&D) in addition to know-how switch.
While the expenditure incurred on R&D can not exceed 15 per cent of the whole funding dedicated by the businesses, the cash to be spent on know-how switch can not exceed greater than 5 per cent, as per the norms.
The thought behind capping the funding on R&D in addition to know-how switch, a senior DoT official mentioned, was to make sure “incremental production” over the subsequent 5 years.
“The priority right now in this PLI, as well as others, is incremental sales and production. While R&D is good for the long term, the immediate requirement is to make sure companies invest in production lines,” an official mentioned.
Any investments in R&D will yield outcomes solely in the long term, which isn’t what the telecom ministry desires proper now, different officers mentioned.
“Only those investments, which are done after April 1 this year, will be considered. And, there was a demand from the industry that they would need some help in the R&D as well as transfer of technology. So, if companies, on their own, spend more on R&D instead of focusing on production, the result will take much longer to come,” one of many officers mentioned.
The telecom ministry can also be unlikely to simply accept the demand of the business to push the bottom 12 months for consideration of incentives below PLI to 2020-2021 from 2019-2020, the officers mentioned.
“The industry had been kept in loop all through the designing of the scheme. They knew very well when the scheme would start, when it would end and what are the various investments that would be considered. We feel that there would be no need for extension of the scheme’s deadlines right now,” an official mentioned.