PRODUCTION-LINKED INCENTIVE SCHEME FOR THE TELECOM SECTOR

• Be N By IAS, Delhi
• 13, Mar 2021

For : GS-3: Economy, Infrastructure-Telecom Sector

CONTEXT:

The Union Cabinet on Wednesday approved the production-linked incentive scheme for the telecom sector with an outlay of ₹12,195 crore over five years.

ABOUT THE SCHEME:

• The scheme aims to make India a global hub for manufacturing telecom equipment, is expected to lead to an incremental production of about ₹2.4 lakh crore
  • Exports: With exports of about ₹2 lakh crore over five years and
  • Investments: Bring in investments of more than ₹3,000 crore.
• Start from: “The implementation of PLI scheme in telecom manufacturing will start from April 1, 2021.”
• Incentivise up to 20 times: “Once qualified, the investor will be incentivised up to 20 times of minimum investment threshold enabling them to utilise their unused capacity.”

SIGNIFICANCE OF SCHEME:

• Employment: The Minister added the scheme was also likely to generate 40,000 direct and indirect employment opportunities.
• Tax revenue of ₹17,000 crore: It will generate tax revenue of ₹17,000 crore from
  • Telecom equipment manufacturing, including
  • Core transmission equipment,
  • 4g/5g next generation radio access network and wireless equipment,
  • Access and customer premises equipment (CPE),
  • Internet of things (IOT) access devices,
  • Other wireless equipment and
  • Enterprise equipment such as switches and routers.
• Offset the import: According to an official release, the core ‘component’ of this scheme is to offset the import of telecom equipment worth more than ₹50,000 crore.
• Sanjeevni for telecom sector: With the telecom industry going through a very difficult phase, this move of the government would surely incentivise telecom service providers.”
  • They opt for equipment manufactured locally, thus saving on substantial costs relating to imports.
• Right path towards self-sufficiency: “While we need to wait and see as to whether there will be many takers for this scheme, surely it appears that these developments are on the right path towards self-sufficiency.”
• International & domestic players: “Many international players are keen to come to India. We will encourage them and also domestic manufacturers.”
• inclusion of MSMEs: For this, the minimum investment threshold has been kept at ₹10 crore, while for others it is ₹100 crore. For MSMEs, a 1% higher incentive is also proposed in the first three years.

OTHER PLI SCHEMES MOBILE AND COMPONENT MANUFACTURING:

• The approval for the scheme followed the success of PLI-scheme related to
  • Mobile manufacturing and
  • Component manufacturing.
• Investment of ₹34,000 crore: Under this, ₹34,000 crore investment has been made by some of the top mobile companies.
  • The government planned to bring similar incentives for laptops and tablet manufacturing.

SOURCE: The Hindu

MCQs:
Q. The Government approved the production-linked incentive scheme for the telecom sector. Consider the following statements regarding this.

1. The scheme aims to make India a global hub for manufacturing telecom equipment.
2. It allows only domestic manufacturers and not international manufacturers.
3. The minimum investment threshold has been kept at ₹10 crore for MSMEs.

Which of the above statements is/are correct?

• a) 1 and 2 Only
• b) 2 and 3 Only
• c) 1 and 3 Only
• d) 1, 2 and 3

ANS: C