Telecom PLIs: India dials the right number

ANALYSIS
Telecom PLIs: India dials the right number
Open for business. A man opens the shutter of a shop painted with an advertisement of Reliance Communications in Mumbai. The DoT is moving to boost PLI schemes in the telecom sector in India.Courtesy: Reuters

Multi-million dollar scheme will significantly augment domestic production as well as drastically cut import dependency and create jobs.

A multi-million dollar production linked incentive (PLI) for the telecom sector in India will significantly augment domestic production as well as drastically cut import dependency and create jobs at a time when the country needs it the most.

According to senior Indian Department of Telecom officials, 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 told The Hindu.

Towards this end, the department has started inviting applications for such PLI schemes which will provide incentives for manufacturing network equipment, routers, broadband transmission equipment, 5G equipment and consumer premise devices, electronics items required for providing optical fibre-based connections and so on.

Resilience initiatives

The move is in line with the recent comments by Indian Minister of External Affairs, Dr S Jaishankar, that India can strengthen and de-risk the global economy through more effective partnership, like the supply chain resilience initiative with Japan and Australia, and PLI schemes that spur investments.

Among other things coronavirus disease (Covid-19) has reshaped the world by changing the perceptions and calculations of nations about each other and the world by bringing out the value of trust and transparency and the importance of reliable supply chains – a point highlighted by Dr Jaishankar at the 26th ‘Future of Asia’ Conference organized by Nikkei.

Telecommunication towers are pictured through hanging flower pots at a residential building in Kolkata. Through its PLI schemes the DoT aims to boost local production of telecom equipment, reduce dependency on imports and provide opportunity to domestic manufacturers to focus on exports as well.
Telecommunication towers are pictured through hanging flower pots at a residential building in Kolkata. Through its PLI schemes the DoT aims to boost local production of telecom equipment, reduce dependency on imports and provide opportunity to domestic manufacturers to focus on exports as well.Courtesy: Reuters

“It has heightened the risk aversion in a world now more insecure and encouraged strategic autonomy to address over-dependence by focusing on the need to create greater global capacities so that pandemic-scale challenges are more effectively met,” the minister said. “What we will now have to conceptualize is re-engineering the way the world works to prepare for and mitigate such cataclysmic events. Covid-19 has certainly triggered debates on issues like supply chains, global governance, social responsibility and even ethics. But for many of us gathered here today, it equally encourages an objective assessment of the contemporary world so that we are better prepared for tomorrow," he added.

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.
- Statement by Samsung Electronics

Telecom as investment

With telecom being one of the foundations of that contemporary world, it is only apt that the DoT is moving to boost PLI schemes in the sector in India.

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. In a letter to DoT, Samsung 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".

A man scans a QR code with a smartphone to buy a bus e-ticket under 3 days trial of contactless ticketing by Delhi Government. Global companies with a turnover of $1.3 billion, domestic companies with over Rs 2.5 billion turnover, and MSMEs with annual turnover of over Rs 100 million are eligible to participate in the DoT’s PLI scheme.
A man scans a QR code with a smartphone to buy a bus e-ticket under 3 days trial of contactless ticketing by Delhi Government. Global companies with a turnover of $1.3 billion, domestic companies with over Rs 2.5 billion turnover, and MSMEs with annual turnover of over Rs 100 million are eligible to participate in the DoT’s PLI scheme.Courtesy: ANI

Boosting manufacturing

Manufacturing capabilities in equipment, electronics, radio and optical systems will certainly get a boost," Samsung said in the letter.

According to government sources quoted in Indian media, Foxconn Technology Group company Rising Stars Mobile has also supported the scheme.

The scheme is expected to bring an investment of over $412 million into the Indian economy and generate a massive tax revenue. Global companies with a turnover of $1.3 billion, domestic companies with over Rs 2.5 billion turnover, and MSMEs with annual turnover of over Rs 100 million 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.

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