IBEF: June 22, 2021
According to official sources, nearly 25 companies including HFCL and Nokia have applied for production linked incentive scheme for telecom sector with an outlay of Rs 12,195 crore.
Local businesses Tejas Networks and Dixon Technologies have confirmed to apply for the scheme before the deadline ends on July 3, 2021.
An official source told PTI, “ So far 25 firms have registered for the Rs. 12,195 crore (US$ 1.64 billion) PLI scheme. There are other large organisations who have expressed interest and are expected to apply for the before the deadline.”
Under the scheme, an investor could receive incentive for incremental sales up to 20 times the dedicated investment, empowering them to achieve global scales and develop their idle facility and expand production.
Key stakeholders from HFCL and Nokia have confirmed that both the companies registered for the scheme.
Coral Telecom managing director, Mr. Rajesh Tuli stated that there are no option for any micro, small and medium companies as they would become non-competitive by 7% if they do not join in the scheme and perish.
He said the telecom sector PLI is a brilliant scheme, although significant weightage should be offered to 'the local value addition to the selection standards.
"Otherwise, there may be 10 large investors or even traders seeking in MSME category each pledging to invest Rs. 50 crore (US$ 6.74 million) who would do repairing and assembly which is ~ 7% of the manufacturing cost.
Mr. Tuli said, “This 7% would be compensated by the government. One has to be cautious and uphold against such circumstances where we may only build traders who upscale themselves by one step.”
Dixon Technologies executive chairman, Mr. Sunil Vachani and Tejas Networks chief executive officer and managing director, Mr. Sanjay Nayak stated they would be applying for the scheme.
ITI Limited, a state-owned telecom gear manufacturer is also in the development of submitting applications.
Investments made by winning applicants in India from April 1, 2021, onwards and up to FY25 would be eligible for incentives, subject to qualifying incremental annual limits.
Under the scheme, the government announced to provide the support for a period of five years from FY22 to FY26.
The scheme is expected to attract an investment of > Rs. 3,000 crore (US$ 404.65 million) and build tax revenue of ~ Rs. 17,000 crore (US$ 2.29 billion).
The government anticipates that over a period of five years, the scheme would boost the equipment manufacturing worth Rs. 2.44 lakh crore (US$ 32.91 billion), with exports of ~ Rs. 2 lakh crore (US$ 26.98 billion).
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.