The Indian government is considering an overhaul of the telecom production-linked incentive (PLI) scheme, which was initially introduced in February 2021. With an allocated budget of Rs 12,195 crore, the scheme aimed to boost telecom manufacturing in the country. However, in FY 23, less than half of the 42 participating companies could meet their targets, resulting in Rs 1,500 crore going unused. In response, the government is contemplating reforms to expand the range of eligible equipment under the scheme and encourage fresh bids.
In 2022, the government had already amended the telecom PLI scheme to incorporate and promote design-led manufacturing, offering an additional one percent incentive. The upcoming changes may include the addition of more products to the scheme, fostering increased domestic production and enabling companies to achieve their targets for financial benefits.
Certain products, such as gigabit passive optical network (GPON) terminals, are experiencing significant demand in India due to the accelerated deployment of 5G by Airtel and Jio. In FY23, 20 companies successfully met their production targets, including industry players like Jabil, VVDN, Nokia, Sanmina, HFCL, Coral, and Tejas Networks, making them eligible for financial benefits totaling around Rs 400 crore.
The telecom PLI scheme is expected to stimulate job creation in India as companies strive for higher targets, contributing to both MSMEs (micro, small, and medium-sized enterprises) and large corporations. The scheme not only positions India as a manufacturing hub but also contributes to the overall economic growth.
