Telecom And Networking Products Manufacturing In India

The PLI Scheme for Telecom and Networking Products Manufacturing in India was announced earlier in the year. Launched by the Department of Telecommunications with a total outlay of US $1.6 billion, the PLI Scheme beneficiaries have been finalized.

India’s telecommunication sector is the latest to announce beneficiaries to its production-linked incentive scheme, first announced in 2021 Union Budget.

Investments made by successful applicants from April 1st 2021 onwards and up to FY 2024-25 are eligible for PLI benefits, subject to qualifying incremental annual thresholds.

Who Are The Beneficiaries?

A total of 31 companies – 16 micro, small and medium enterprises (MSMEs) and 15 Non-MSMEs (eight domestic companies and seven global companies) have been found eligible by the DoT under the scheme.

The eligible PLI beneficiaries for telecom and networking products manufacturing are indicated in the list below:

These 31 PLI beneficiaries are expected to invest US $447 million in the next four years and generate incremental employment for more than 40,000 people.

The PLI scheme seeks to boost domestic research and development of new products on which 15% of the committed investment could be invested.

How The PLI Scheme Works

The production linked incentive scheme aims to promote telecom and networking products manufacturing in India.

Financial incentives in percentages of sales are offered to attract investments and boost manufacturing in the target segments of telecom and networking products.

The PLI Scheme is also expected to boost the exports of telecom and networking products “Made in India”.

Eligibility

Eligibility to benefit under the scheme is subject to achievement of a minimum threshold of cumulative incremental investment over a period of four years and incremental sales of manufactured goods over the base year.

Applicants are expected to meet all the minimum threshold conditions to be eligible for disbursement of incentive.

The company/entity can also invest in single or multiple eligible products to meet minimum incremental investment and sales threshold.

The minimum investment threshold for MSMEs is US $1.3 million and US $13.3 million for others. Land and building cost will not be counted as investment.

Additionally, eligibility under PLI Scheme will not affect eligibility under any other scheme being implemented by State/UT Governments.

Incentives

The applicable incentive percentage for MSMEs is seven percent for Year-1 and Year-2, six percent for Year-3, five percent for Year-4, and four percent for Year-5 on eligible sales over the base year.

For categories other than MSMEs, the applicable incentive percentage is six percent for Year-1 and 2, five percent for Year-3 and 4, and four percent for Year-5 on eligible sales over the base year.

The incentives will be applicable on sales of manufactured finished goods net of taxes, discounts, and commissions, etc. (as distinct from traded goods) – subject to ceilings and the company meeting the cumulative investment criteria.

PLI Target List Of Specified Telecom And Networking Products

India’s Telecom Landscape

Investments And Key Developments

India is the world’s second-largest telecommunications market, having a subscriber base of about 1.16 billion. The country has witnessed strong registration growth over the last 10 years and daily increase to the subscriber base.

This proves the sector’s investment appeal; foreign direct investment (FDI) into India’s telecom sector during April 2000 – March 2021 totaled US $37.66 billion, according to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT).

Recent notable developments in the sector include:

• In August 2021, Tata Group company Nelco announced negotiations with Canadian firm Telesat for launching fast satellite broadband services in India.
• In April 2021, SpaceX announced it would be accepting pre-orders for the beta version of its Starlink satellite internet service in India; the Department of Telecommunications (DoT) is screening the move.
• In March 2021, Advanced Television Systems Committee (ATSC) and Telecommunications Standards Development Society, India (TSDSI) signed a deal to boost adoption of ATSC standards in India to make broadcast services available on mobile devices. This allows the TSDSI to follow ATSC standards, fostering global digital broadcasting standard harmonization.
• In March 2021, Vodafone Idea Ltd. announced its acquisition of spectrum in five circles would boost its 4G coverage and bandwidth.
• In December 2020, BSNL and Skylotech India announced satellite-based NB-IoT (Narrowband-Internet of Things) for fishermen, farmers, construction, mining, and logistics enterprises.
• In the first quarter of FY 2020-21, customer spending on telecom services increased 16.6% year-on-year, with over three-fourths spent on data services despite pandemic-linked disruptions and lockdown restrictions to offline recharges (for a weeks).
• India had over 500 million active internet users (accessed internet in the last one month) as of May 2020.
• In June 2020, Jio Platforms Ltd. sold 22.38% stake worth INR 1.04 trillion (US $14.75 billion) to 10 global investors in a span of eight weeks under separate deals, involving Facebook, Silver Lake, Vista, General Atlantic, Mubadala, Abu Dhabi Investment Authority (ADIA), TPG Capital and L. Catterton. This is the largest continuous fundraise by any company in the world.

Foreign Investment In India’s Telecom Equipment Manufacturing