Govt plans telecom PLI scheme revamp, may focus on MSMEs and exports

Focus to remain on absorbing more export-oriented segments, involving greater number of MSMEs

The government is planning to revamp the production-linked incentive (PLI) scheme for the telecom sector in a bid to quickly boost exports and incorporate more micro and small units into the manufacturing ecosystem, officials said.

Funding for the expanded scheme may not be a challenge since the Department of Telecomm­unications (DoT) has surplus funds of more than Rs 1,000 crore for the purpose, they pointed out.

The move to expand the scheme stems from the increasing need to set up a full-scale telecom manufacturing ecosystem in the country, and covering a larger set of network equipment will be key to it, the officials said. The scheme aims to promote domestic manufacturing of telecom and networking products. “Triggering higher levels of domestic value addition in key product categories was required when the scheme was brought in. That has happened, and  we need to expand it to the next level. There is a need to quickly capture market demand for telecom gear in key countries currently going through their own 5G rollout,” said one of the officials.

Talks are on to expand the scheme and a formal round of stakeholder consultations will soon begin, people in the know said. The move is also part of the plans to export a full range of indigenously designed 4G and 5G stacks in 2024 in tune with its policy to attract investments and use the technological outreach as a key foreign policy bet. 

Several countries, such as Kenya, Mauritius, Papua New Guinea, and Egypt, have shown interest in Indian telecom technology.

Surplus funds

With nearly half of the 42 PLI beneficiary companies being unable to meet targets in FY23, the department had a fund surplus of more than Rs 1,500 crore. Though it has begun releasing funds for FY24, there is still a surplus of more than Rs 1,000 crore for the purpose, the officials said.

Back then, DoT had announced that the scheme is expected to generate additional sales of Rs 2.45 trillion and create more than 44,000 employment.

As on October-end last year, the Centre had received Rs 2,725 crore investments from companies under PLI, DoT had informed Parliament. This was out of the total Rs 4,014 crore committed by the companies. Meanwhile, products worth Rs 8,804 crore had been exported till then, and 15,500 jobs had been created.

Terms and conditions

The companies had earlier complained of stiff incremental and production targets for the first year, or 2021-22. Currently, applicants have to satisfy the minimum global revenue criteria to be eligible under the scheme. Companies can invest in single or multiple eligible products.

The scheme stipulates a minimum investment threshold of Rs 10 crore for MSMEs and Rs 100 crore for non-MSME applicants. Land and building costs will not be counted as investment. Eligibility is also subject to higher sales of manufactured goods over the base year (FY20). The allocation for MSMEs had also been enhanced from Rs 1,000 crore to Rs 2,500 crore.

Manufacturing gets a boost 

> Rs 2,725 crore invested by firms under PLI as of October-end 2023

> Rs 4,014 crore total committments by companies

> Rs 8,804 crore worth of products exported till October-end

> 15,500 employment opportunities created

> First notified in 2021 with an outlay of Rs 12,195 crore, upgraded in 2022