The Government of India has announced a major update of the production-linked incentive (PLI) scheme for the telecom sector to encourage 5G adoption and enhance India’s self-reliance in telecom equipment manufacturing. With over Rs 1,500 crore unutilized and less than half of the 42 companies meeting their financial year 2022-23 targets, the proposed revisions aim to incentivize additional telecom networking products and welcome fresh applications.
The Department of Telecommunications (DoT) had initiated a PLI scheme for telecom and networking products back in February 2021, allocating a substantial Rs 12,195 crore for the program. However, only 31 out of the 42 selected companies secured approval for the scheme, prompting a revaluation of its effectiveness. The PLI scheme underwent an amendment in April last year, highlighting design-led manufacturing with an additional incentive rate of one per cent.
Regardless of the rise in demand for certain telecom products such as gigabit passive optical network (GPON) terminals, fuelled by the expanding 5G deployment across the nation, only 20 of the 42 companies managed to meet their FY23 targets. Notable companies like Nokia, Jabil, Sanmina, HFCL, VVDN, Coral, and Tejas Networks are reportedly eligible for incentives totalling around Rs 400 crore.
The revised scheme is likely to broaden the spectrum of eligible products for incentives. Some firms experienced delays in orders during the 5G rollout, impacting sales targets. However, with streamlined operations and the evolution of 5G infrastructure, most companies are expected to meet their targets in the coming fiscal year.
The PLI scheme’s extension, considering the disruptions caused by the COVID-19 pandemic, saw the selection of 42 firms, including 28 Micro, Small, and Medium Enterprises (MSMEs). The government aims to ensure the entire scheme outlay is utilized, projecting additional sales of Rs 2.45 trillion and the creation of over 44,000 jobs during the five-year scheme period.
Industry experts have welcomed the government’s stance in reassessing and potentially enhancing the PLI scheme, acknowledging the challenges posed by the 5G rollout. The telecom sector plays an important role in India’s digital transformation, and a strong PLI scheme is seen as crucial for promoting new innovation, boosting domestic manufacturing, and positioning India as a global player in the telecommunications industry.
The proposed changes in the PLI scheme align with the government’s broader vision of Atmanirbhar Bharat (Self-Reliant India) and the ‘Make in India’ initiative. By incentivizing companies to meet and exceed their targets, the government aims not only to accelerate the adoption of 5G technology but also to rise India’s standing in the global telecom equipment manufacturing.
As the government conders changing the current PLI scheme, the telecom industry is watching closely for potential updates that could further boost their growth, innovation, and self-reliance in this critical sector. The successful implementation of these proposed changes could only help position India as one of the key player in the global telecom market