Production Linked Incentive (PLI) Scheme for Promoting Telecom and Networking Products Manufacturing in India

The Ministry of Communications, under the Department of Telecommunications (DoT), has introduced the Production Linked Incentive (PLI) Scheme to boost domestic manufacturing and attract investments in the telecom and networking products sector. This initiative aligns with the Government of India’s vision of “Make in India” and aims to enhance India’s position as a global manufacturing hub for telecom and networking products.

Background

The telecommunication sector plays a crucial role in driving economic growth and enabling digital connectivity under the Digital India initiative. Recognizing the importance of this sector, the PLI Scheme was launched on 24th February 2021 to incentivize the production of telecom and networking products in India. The scheme is expected to increase domestic manufacturing, attract investments, and boost exports of “Made in India” products.

Objectives

The PLI Scheme has the following key objectives:

Promote Domestic Manufacturing: Encourage companies to manufacture telecom and networking products in India.
Attract Investments: Facilitate investments in the telecom and networking sector.
Boost Exports: Increase the export of telecom and networking products manufactured in India.

Target Segments

The scheme provides support to companies/entities engaged in manufacturing specified telecom and networking products in India. The target segments include:

Core Transmission Equipment: Products such as Dense Wavelength Division Multiplexing (DWDM), Optical Transport Network (OTN), Multi-Service Provisioning Platform (MSPP), and others.
4G/5G, Next Generation Radio Access Network and Wireless Equipment: Includes 4G/5G RAN Base Station & Core Equipment, Edge and Enterprise Equipment, and Wireless Telecommunication Equipment.
Access & Customer Premises Equipment (CPE), IoT Access Devices, and Other Wireless Equipment: Products like GPON Optical Network Terminal (ONT), Wi-Fi Access Point and Controller, LTE CPE, 5G CPE, and IoT Access Devices.
Enterprise Equipment: Switches, Routers, Internet Protocol (IP), and Packet Switching and Routing Apparatus.
Other Products: As decided by the Empowered Group of Secretaries (EGoS).

Eligibility Criteria

To qualify for the PLI Scheme, applicants must meet specific eligibility criteria:

Investment Threshold:
- MSMEs: Minimum investment of ₹10 Crores.
- Non-MSMEs: Minimum investment of ₹100 Crores.
- Land and building costs are excluded from the investment calculation.
Incremental Sales: Applicants must achieve a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods (net of taxes) over the base year (FY 2019-20).
Global Revenue:
- Global Companies: Revenue exceeding ₹10,000 Crores in the base year.
- Domestic Companies: Revenue exceeding ₹250 Crores in the base year.
- MSMEs: Revenue exceeding ₹10 Crores in the base year.
Exclusivity: Beneficiaries under this scheme cannot avail benefits for the same products under other PLI schemes of the Central Government. However, eligibility under this scheme does not affect eligibility for state/UT government schemes.

Incentive Structure

The scheme offers financial incentives based on incremental sales of eligible products over the base year. The incentive rates are as follows:

For MSMEs:

Year 1 & 2: 7%
Year 3: 6%
Year 4: 5%
Year 5: 4%

For Non-MSMEs:

Year 1 & 2: 6%
Year 3 & 4: 5%
Year 5: 4%

An additional 1% incentive is available for products qualified under Design-led Manufacturing.

Tenure of the Scheme 

The PLI Scheme is effective from 1st April 2021 and has been extended to a tenure of 6 years (FY 2021-22 to FY 2026-27). Companies can choose a period of 5 consecutive years to achieve the net incremental sales for incentive claims:

FY 2021-22 to FY 2025-26, or
FY 2022-23 to FY 2026-27.

Existing PLI beneficiaries opting for the second block must forego their investments made during FY 2021-22.

Post PLI Export Statistics

Budgetary Outlay

The total financial allocation for the PLI Scheme is ₹12,195 Crores over the scheme’s tenure. For MSMEs, the maximum financial allocation is ₹2,500 Crores.

Application Process

Applications can be submitted online through the PLI Scheme portal (https://www.pli-telecom.udyamimitra.in).
Applicants must submit a single application but can apply for multiple products under the Scheme Target Segments.
Applications will be scrutinized by the Project Management Agency (PMA), which will recommend eligible applications to the DoT for approval.
A non-refundable application fee is required for each application.

Disbursement of Incentives 

Approved applicants must submit claims for disbursement after the end of the financial year, but no later than 9 months from the end of the said year.
The PMA will verify claims and recommend disbursement to the Competent Authority.
Incentives will be disbursed via Direct Bank Transfer through the Public Financial Management System (PFMS).

Monitoring and Review 

The scheme will be monitored by the Empowered Group of Secretaries (EGoS), chaired by the Cabinet Secretary. The EGoS will:

Periodically review the progress of eligible companies.
Revise incentive rates, ceilings, and eligibility criteria as needed.
Address any issues arising due to Force Majeure events.

Additionally, a Steering Committee will oversee the progress of investments, employment generation, production, and value addition under the scheme.

Amendments to the Scheme 

Several amendments were introduced on 18th June 2021 and 20th June 2022 to enhance the scope and timelines of the scheme. Key changes include:

Introduction of Design-led Manufacturing for 5G products.
Extension of the scheme tenure to 6 years.
Increased financial allocation for MSMEs from ₹1,000 Crores to ₹2,500 Crores.
Additional incentive of 1% for Design-led Manufacturing products.

Conclusion

The PLI Scheme for Telecom and Networking Products is a significant step towards strengthening India’s manufacturing capabilities and promoting self-reliance in the telecom sector. By incentivizing investments and production, the scheme aims to create a robust ecosystem for telecom and networking products, generate employment, and boost exports. With a substantial budgetary outlay and a transparent application process.

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Source: Ministry of Communications, Department of Telecommunications, Govt. of India

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