Govt considers revising PLI scheme for telecom to spur 5G adoption

Rs 1,500 crore sits unutilised as only 20 of the 42 companies met their targets at the end of the financial year in March 2023

The government is contemplating the release of a revamped version of the production-linked incentive (PLI) scheme for telecom equipment, according to a report by The Economic Times (ET). With over Rs 1,500 crore unutilised and less than half of the 42 companies meeting their financial year 2022-23 (FY) targets, the revised scheme aims to incentivise additional telecom networking products and open doors for fresh applications.

The Department of Telecommunications (DoT) introduced the PLI scheme for telecom and networking products in February 2021 with a Rs 12,195 crore outlay. However, only 31 out of 42 selected companies received approval for the scheme, prompting the government to consider revisions. The PLI scheme was amended in April last year to promote design-led manufacturing, with an additional incentive rate of one per cent.

Certain telecom products, like gigabit passive optical network (GPON) terminals, are witnessing increased demand as 5G deployment expands across the country. Twenty companies, including Nokia, Jabil, Sanmina, HFCL, VVDN, Coral, and Tejas Networks, have reportedly met their FY23 targets, making them eligible for incentives amounting to approximately Rs 400 crore.

According to ET, the revised scheme will likely expand the list of eligible products for incentives. Some firms faced delays in orders amid the 5G rollout, impacting sales targets. However, with streamlined operations, most companies are expected to meet targets next year.

As part of the scheme's extension due to Covid-related disruptions, 42 firms, including 28 MSMEs, were selected. The government aims to ensure the entire scheme outlay is utilised, projecting additional sales of Rs 2.45 trillion and the creation of over 44,000 jobs during the five-year scheme period to enhance India's self-reliance in telecom equipment manufacturing.