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37 local and global telecom gear vendors and manufacturers have applied for the PLI Scheme for telecom and networking equipment manufacturing. This list includes the likes of Nokia, Cisco, Flex, Foxconn and Jabil, among others.
PLI Scheme for Telecom Infra Attracts 37 Applications
The telecom department had issued detailed guidelines for the PLI scheme for telecom equipment and networking products manufacturing last month. As such, till date, 37 applicants have confirmed their applications to the same.
A notable missing name remains of Samsung, who did not apply due to the high investment needed. Right now, the company has only one customer in India, Reliance Jio. Hence, it did not see the need to invest that much currently.
On the other hand, Ericsson applied for the scheme via its partner Jabil. On the occasion, Nitin Bansal, CEO, Ericsson India, said, "we confirm our participation in the PLI scheme for the telecom sector through our partner Jabil. Being the first telecom vendor to start manufacturing in India in 1994, the additional investments made under the PLI scheme will help us scale up our Pune facilities where we are currently manufacturing 4G and 5G telecom equipment".
He added, "the 5G radios produced at our Pune facility will help us meet the requirements of the domestic market when 5G is introduced in India. We stay committed to India and look forward to the opportunity of helping Indian service providers seamlessly evolve their networks from 4G to 5G".
Local vendors including Tejas Networks, Coral Telecom, HFCL and Dixon Technologies have also applied for the PLI scheme.
DoT to Pick 20 from the Applicants
Now the task ahead of the telecom department is to select companies from these applicants. The DoT will choose companies based on competitive investment; companies committing higher investment will have better chances of getting selected.
As the department specified in early June, it will select 10 MSMEs and 10 large manufacturers for the PLI Scheme. These companies will receive incentives worth ₹12,195 crore over a 5-year period on achieving production targets. The government has earmarked ₹1,000 crore only for MSMEs, among which 3 will be local manufacturers. The telecom department hopes to boost products of equipment such as 4G/5G RANs, IoT devices, customer equipment, routers and switches.
Getting the Telecom Trade Deficit Down
The PLI scheme has widely been regarded as a move to reduce the overall trade deficit. To that extent, the government recently increased customs duty from 0 to 10-20% on various components. These include PCBA, base station controller, system module and cables, among others, that go into telecom equipment. What's more, the government will charge a 10% surcharge on the customs duty as well. As such, international telecom gear vendors like Ericsson and Nokia have warned the government of the consequences.
They said that the customs duty imposed on components for telecom equipment will impact the cost effectiveness of local manufacturing. They told the DoT that the policy change will result in an overall increase of 5-6% in the local manufacturing cost of radios, baseband and microwave.
The government has targeted a production of ₹2.4 lakh crore with the PLI scheme. It also hopes to create 40,000 direct and indirect jobs, and attract ₹3,000 crore in investments.