Production Linked Incentive Scheme For Promoting Telecom & Networking Products Manufacturing In India

Production Linked Incentive Scheme

The Department of Telecommunications (DoT) took a significant step towards enhancing domestic manufacturing, investments, and exports in the telecom and networking products sector by notifying the “Production Linked Incentive (PLI) Scheme” on 24th February 2021. This scheme aims to invigorate the domestic production landscape and stimulate investments in the specified sectors.

Overview table of Production Linked Incentive Scheme

Aspect	Details
Total Financial Outlay	₹12,195 Crores over five years
Financial Allocation for MSMEs	₹2,500 Crores
Project Management Agency (PMA)	Small Industries Development Bank of India (SIDBI)
Effective Date	1st April 2021
Duration	Five years (FY 2021-22 to FY 2026-27)
Supported Product Categories	– Core Transmission Equipment – 4G/5G, Next Generation RAN and Wireless Equipment – Access & CPE, IoT Access Devices, and Other Wireless Equipment – Enterprise Equipment: Switch and Router
Incentive Structure	– Minimum investment threshold: ₹10 Crores for MSMEs and ₹100 Crores for Non-MSMEs – Incentive rates range from 7% to 4% over five years for MSMEs and from 6% to 4% over five years for Non-MSMEs – Incremental Sales criteria for eligibility
Eligibility Criteria	– Manufacturing in India – Compliance with FDI Policy 2020 – Meeting predefined revenue thresholds based on global manufacturing revenue – Minimum cumulative incremental investment and sales thresholds – Non-overlap with other central government PLI Schemes for the same product
Application Process	– Registration on the Scheme implementation portal – Verification through Nodal Officer’s email – Document Submission with non-refundable application fee – Initial Scrutiny by PMA – Rectification of deficiencies if any – Shortlisting and recommendation for approval by DoT
Documents Required	– PAN – Authority Letter for Nodal Officer – Certificate of Incorporation

Scheme Overview

The PLI Scheme, with a total financial outlay of ₹12,195 Crores over five years, intends to incentivize companies to manufacture telecom and networking products within India. Among its key features are:

1. Financial Allocation: The scheme allocates ₹2500 Crores specifically for Micro, Small, and Medium Enterprises (MSMEs), acknowledging their role in the manufacturing ecosystem.
2. Project Management: The Small Industries Development Bank of India (SIDBI) has been appointed as the Project Management Agency (PMA) for the PLI scheme, ensuring efficient implementation and oversight.
3. Effective Date: The scheme became effective from 1st April 2021, allowing investments made from this date onwards to qualify for incentives.
4. Duration: Support under the scheme will be provided for a period of five years, spanning from FY 2021-22 to FY 2026-27.

Supported Product Categories

The scheme targets the manufacturing of specified telecom and networking products falling under the following four categories:

1. Core Transmission Equipment
2. 4G/5G, Next Generation RAN and Wireless Equipment
3. Access & CPE, IoT Access Devices, and Other Wireless Equipment
4. Enterprise Equipment: Switch and Router

Incentive Structure

The scheme offers incentives based on the level of investment and incremental sales achieved by the companies. The minimum investment thresholds and proposed incentive rates are as follows:

For MSMEs:

• Minimum Threshold of Investment: ₹10 Crores
• Proposed Incentive Rates ranging from 7% to 4% over five years
• Incremental Sales criteria for eligibility

For Non-MSMEs:

• Minimum Threshold of Investment: ₹100 Crores
• Proposed Incentive Rates ranging from 6% to 4% over five years
• Similar Incremental Sales criteria for eligibility

Eligibility Criteria

To qualify for the scheme, companies must meet stringent eligibility criteria, including:

1. Manufacturing in India: Companies must manufacture goods covered under the scheme target segments within India.
2. Compliance: Foreign investments must adhere to the Foreign Direct Investment (FDI) Policy 2020.
3. Global Manufacturing Revenue: Companies must meet predefined revenue thresholds based on their global manufacturing revenue in the base year.
4. Incremental Investment and Sales: Eligibility is subject to minimum cumulative incremental investment and sales thresholds over the base year.
5. Non-Overlap with Other Schemes: Companies cannot simultaneously avail benefits under this PLI Scheme and any other central government PLI Scheme for the same product.

Application Process of Production Linked Incentive Scheme

The application process for the PLI Scheme is streamlined and conducted online. Key steps include:

1. Registration: Companies register on the Scheme implementation portal and fill out the application form.
2. Verification: A verification link is sent to the Nodal Officer’s email for authentication.
3. Document Submission: Applicants submit required documents and pay a non-refundable application fee.
4. Initial Scrutiny: The PMA conducts an initial scrutiny of applications to ensure compliance with scheme requirements.
5. Rectification: Applicants rectify any deficiencies within the stipulated time frame.
6. Shortlisting: Eligible applications are shortlisted and recommended for approval by the DoT.

Documents Required

Applicants are required to upload three essential documents:

1. PAN
2. Authority Letter for Nodal Officer
3. Certificate of Incorporation

Conclusion: Production Linked Incentive Scheme

The Production Linked Incentive Scheme for telecom and networking products represents a significant stride towards bolstering domestic manufacturing and investment in India. By providing incentives and establishing clear eligibility criteria, the scheme aims to create a conducive environment for companies to thrive in the specified sectors while contributing to the nation’s economic growth.

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