Telecom equipment makers soar after Govt extends PLI scheme to telecom sector

Shares of eight telecom equipment makers jumped by 2% to 17% after the Union Cabinet on 17 February 2020 extended the Production Linked Incentive (PLI) scheme for telecom and networking products.

D-Link (India) (up 17.34%), ITI (up 10.3%), HFCL (up 10.2%), Tejas Networks (up 10%), Smartlink Holdings (up 9.55%), Optiemus Infracom (up 4.97%), Indus Towers (up 3.99%) and Avantel (up 2.09%) advanced.

The approval comes in wake of PLI related to Mobile and component manufacturing, which was announced in April 2020 during the height of Covid pandemic.

The scheme outlay is Rs 12,195 crore over five years. The eligibility for the scheme will be subject to achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes. Financial Year 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes. The scheme will be operational from 1 April 2021.

The core component of this scheme is to offset the huge import 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 scheme also addresses local manufacturing in MSME category because government desires MSMEs to play an important role in the telecom sector and come out as national champions. The scheme will lead to incremental production of around Rs 2.4 lakh crore with exports of around Rs 2 lakh crore over 5 years.

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