Money troubles due to COVID: Telecom PLI could be extended for another year

The government may extend the Production Linked Incentives (PLI) program for the manufacture of telecommunications equipment for another year, as about 16 small and medium-sized enterprises have not yet submitted their investment plans and have not are unlikely to meet production targets for the current fiscal year.

Some companies have also committed investments, but are unlikely to meet their production targets due to supply chain issues. On October 14, the government launched the PLI program for telecommunications manufacturing, under which 31 global and local companies were selected to undertake incremental production worth Rs 1.82 trillion over five years. But so far, 15 companies have given their investment plans, while the other 16 are still in the process of doing so. Since many of these companies are mid-sized or small, it has been difficult to raise funds, especially during the pandemic.

“SMEs have been hit hard by the pandemic, so we will give them time and, if necessary, also extend the duration of the program. We have also extended the deadline for mobile phones,” an official said, adding that any decision on the extension will be made after evaluation this month or in May.

In November-December, several local businesses had written to the Department of Telecommunications (DoT), requesting a one-year extension. Apart from individual companies, the industry body Cellular Operators’ Association of India (COAI) had also requested a one-year extension due to shortage of semiconductors as well as supply chain delays.

The objective of the PLI program is to stimulate domestic manufacturing of telecommunications and networking products by encouraging additional investment and turnover with a total expenditure of Rs 12,195 Crore. The program becomes effective on April 1, 2021. Investments made by successful applicants in India from April 1, 2021 and up to the financial year 2024-25 will be eligible, subject to additional annual qualifying thresholds. Support under the scheme is provided for a period of five years, from fiscal year 2021-22 to fiscal year 2025-26.

Notable companies selected under the program include Flextronics, Foxconn, Jabil, Nokia, Rising Star, Dixon Technologies, VVDN Technologies, Tejas Networks, HFCL, ITI, Coral Telecom and Lekha Wireless, among others. Overall, a total of 31 companies, comprising 16 MSMEs and 15 non-MSMEs (8 domestic companies and 7 global companies) were selected. The scheme offers incentives between 4% and 7% for different categories and tenure durations. For MSMEs, a 1% higher incentive is offered in years 1, 2 and 3. The 2019-2020 financial year will be treated as the base year for the calculation of cumulative incremental sales of duty-free manufactured goods.

The minimum investment threshold for MSMEs has been kept at Rs 10 crore and for others at Rs 100 crore. Telecommunications equipment that would be covered by the program includes basic transmission equipment, next generation 4G/5G radio access network and wireless equipment, access and customer premises equipment, access to the Internet of Things (IoT), other wireless equipment and enterprise equipment such as switches. , routers, etc.