The main objective of Rs 12,195-crore production linked incentive (PLI) for the telecom sector is to boost domestic production, cut import dependency and create jobs, a senior DoT official said on Friday.
The official said the scheme has been designed after wide and regular consultations with the industry, which includes discussions on the provision around research and development.
"Through PLI, our objective is to boost local production of telecom equipment, reduce dependency on imports and provide opportunity to domestic manufacturers to focus on exports as well. India wants to make for the world also," a DoT official, who did not wish to be named, told PTI.
The Department of Telecom (DoT) has started inviting applications for the PLI scheme for the telecom sector which will provide incentive for manufacturing of network equipment, routers, broadband transmission equipment, 5G equipment and consumer premise devices, electronics items required for providing optical fibre-based connections etc.
Under the scheme, an investor can get incentive for incremental sales up to 20 times the committed investment, enabling them to reach global scales and utilise their unused capacity and ramp up production.
Nokia and HFCL have shown willingness to participate in the scheme while both international and domestic players have appreciated the move.
Korean electronics major Samsung has also reached out to the DoT backing the scheme.
Samsung in a letter to the DoT has said that during these unprecedented times, continuous policy support and creation of a conducive policy environment for the electronics sector shows the government's unwavering commitment to make the country a manufacturing hub.
"We, in Samsung, sincerely appreciate and whole-heartedly support the government's initiative network PLI. The scheme will not only complement the next generation telecom services, including the 5G rollout, but also support India's flagship programme, "Make In India". Manufacturing capabilities in equipment, electronics, radio and optical systems will certainly get a boost," Samsung said in the letter.
The Korean technology major said that it "firmly stands committed to India' growth story".
According to government sources, Foxconn Technology Group company Rising Stars Mobile has also supported the scheme.
Sources at Nokia India have said that the company will definitely participate in the company.
HFCL Managing Director Mahndra Nahata said that the scheme will make telecom equipment manufacturing in the country competitive, reduce imports and increase exports.
"PLI scheme will go a long way in achieving the objective of Aatmanirbhar Bharat. We will participate in the scheme," Nahata said.
The scheme will be effective from April 1, 2021. Investments made by successful applicants in India from April 1, 2021, onwards and up to the financial year 2024-25 shall be eligible for incentives, subject to qualifying incremental annual thresholds. The support under the scheme shall be provided for a period of five years from FY22 to FY26.
When asked if DoT is mulling changing base year due the impact of Covid-19 pandemic, the officer said that there is no plan as of now but it is higher authority who will have to decide on it if situation arises.
The scheme is expected to bring an investment of over Rs 3,000 crore and generate a tax revenue of about Rs 17,000 crore.
Global companies with a turnover of Rs 10,000 crore, domestic companies with over Rs 250 crore turnover, and MSMEs with annual turnover of over Rs 10 crore are eligible to participate in the scheme.
"We are pleased to note the government's focus on supporting domestic companies and MSME in this sector. We also need to support Indian companies with suitable policy intervention that will help them to build domestic research and development and design capabilities and to create an innovative product that can compete on the global stage," ICEA chairman Pankaj Mohindroo said.
India Cellular and Electronics Association (ICEA), whose members include Apple, Foxconn, Wistron etc, said encouragement to research and development will help the Indian champion companies to become globally competitive, attract investment in the areas of core competency and cutting-edge technology, enhance exports and make India an integral part of the global supply chain.
The government expects that the scheme will encourage production of equipment worth Rs 2.44 lakh crore with exports of around Rs 2 lakh crore over a period of five years.