The Department of Telecom (DoT) has announced an incentive scheme for design-led manufacturing, along with extending the duration of production-linked incentive (PLI) scheme for telecom networking products by a year. The DoT had notified the PLI Scheme on February 24, 2021, with a financial outlay of Rs 12,195 crore. The DoT has amended the clause and made the scheme effective from April 1, 2022.
Why the change
“After consultations with stakeholders, the guidelines for the PLI Scheme for telecom and networking products have been amended to introduce the Design-led Manufacturing with additional incentive rates,” DoT said in a statement.
What are the key changes
* The new scheme has raised the incentive rate by an additional 1%.
* Based on feedback from stakeholders, DoT says that it has decided to extend the existing PLI Scheme by one year. The existing PLI beneficiaries will be given an option to choose financial year 2021-22 or financial year 2022-23 as the first year of incentive.
* The new version of telecom PLI scheme also removes the condition of 15% cap on investment to be made for research and development.
* DoT has also approved 11 new telecom and networking products to the existing list that can be manufactured under the scheme.
* The incentives will be given from the Rs 4,000 crore which is left from the total outlay.
Who will be eligible for the scheme
Telecom equipment makers who use 50% of Made in India components in their product will be eligible for the design-linked incentive. The scheme stipulates a minimum investment threshold of Rs 10 crore for MSMEs and Rs 100 crore for non-MSME applicants. Land and building cost will not be counted as investment under the scheme. The allocation for MSME has been enhanced from Rs 1,000 crore to Rs 2,500 crore. DoT also said that applications for design-led manufacturing will be prioritized over other manufacturers while shortlisting.
When can companies apply
The application window will open from June 21 till July 20. Applicants can avail incentives for 5 years commencing from April 1, 2022 up to FY 2025-26.
What is the eligible category of investment as per the PLI scheme for telecom and networking products
Investment under the PLI Scheme for telecom and networking products can be made in the scheme target segments, capitalized in the books of accounts of the applicants under the following categories:
a) Plant, Machinery, Equipment and Associated Utilities.
b) Research and Development.
c) Transfer of Technology (ToT) Agreements.