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PLI SCHEME FOR TELECOM SECTOR

The Union Cabinet has approved the Production-Linked Incentive (PLI)scheme for the telecom sector with an outlay of Rs. 12,195 crores over five years.

About the PLI Scheme:

• In order to boost domestic manufacturing and cut down on import bills, the central government in March 2020 introduced a scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units.
• Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.
• The Scheme has been approved for many sectors including electronic products, IT hardware, pharmaceuticals, automobiles and components, etc.

PLI Scheme for Telecom Sector :

• This Scheme is for domestic manufacturing of telecom and networking products such as switches, routers, 4G/5G radio access network, wireless equipment and other internet of things (IoT) access devices.
• It will be operational from 1st April, 2021.

Eligibility for the Scheme:

• It is subject to achieving a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods.
• The cumulative investment can be made at one go, subject to annual cumulative threshold as prescribed for four years being met.
• 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes.

Incentives:

• An investor who qualifies for the scheme will be incentivised up to 20 times the minimum investment threshold, enabling them to utilise their unused capacity.

Higher Incentives for MSMEs:

• For Micro, Small and Medium Enterprises (MSMEs), the minimum investment threshold has been kept at Rs. 10 crore, while for others it is Rs. 100 crore.
• For MSMEs, a 1% higher incentive is also proposed in the first three years.

Significance :

• The scheme is expected to lead to an incremental production of about Rs. 2.4 lakh crore, with exports of about Rs. 2 lakh crore over five years and bring in investments of more than Rs. 3,000 crore.
• Scheme is also likely to generate 40,000 direct and indirect employment opportunities and generate tax revenue of Rs. 17,000 crore from telecom equipment manufacturing.
• Through this scheme, India will move towards self-reliance. Currently, India imports over 80% of its telecom and wireless networking equipment.

SOURCE: PIB,THE ECONOMIC TIMES