The government has amended the production linked incentive (PLI) scheme for telecom sector to introduce the design-led manufacturing with additional incentive rate of 1 per cent over and above existing incentive rates.

With the objective to build a strong ecosystem for 5G, the Union Budget 2022-23 had proposed to launch a scheme for design-led manufacturing as part of the existing PLI Scheme.

"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," the Ministry of Communications said in a release on Monday (20 June).

Further, Department of Telecommunications (DoT) based on feedbacks from stakeholders including the selected PLI applicants, has decided to extend the existing PLI Scheme by one year, it said.

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 ministry said.

DoT has also approved addition of 11 new telecom and networking products to the existing list, based on suggestions from the stakeholders, it added.

Department of Telecommunications (DoT) had notified the Production Linked Incentive (PLI) Scheme on 24 February last year, with a financial outlay of Rs 12,195 crore.

A total of 31 companies, comprising of 16 MSMEs and 15 non-MSMEs including eight domestic and seven global companies were given approval on 14 October 2021.

Now, to promote design-led manufacturing in the sector, the DoT is inviting applications from design-led manufacturers as well as others, for availing incentive under the PLI scheme for five years commencing from 1 April 2022.

The registration process for the scheme will be open to Interested eligible applicants from 21 June and the application window will be open for 30 days upto 20 July.

The applications are being invited for the balance fund of more than Rs 4,000 crore.

This will give a boost to manufacturing of telecom and networking products to develop 5G ecosystem for India, the ministry said.

Investment made by successful applicants in India from 1 April 2022 onwards and up to Financial Year 2025-2026 will be eligible, subject to qualifying incremental annual thresholds.

The scheme is open to both MSME and non-MSME companies including domestic and global firms.

The applications from design-led manufacturers will be prioritised over other manufacturers while shortlisting.

The design-led manufacturing is primarily aimed to support efforts for designing telecom products in India. It will recognise and encourage R&D-driven manufacturing in the country to enhance its contribution to global value chain as envisaged in the National Digital Communication Policy, 2018.

Applicants will have to satisfy the minimum Global Revenue criteria to be eligible under the scheme. The Company may decide to invest for single or multiple eligible products.

The Scheme stipulates a minimum investment threshold of Rs 10 crore for MSME and Rs 100 crore for non MSME applicants. Land and building cost will not be counted as investment.

Eligibility will be further subject to Incremental Sales of Manufactured Goods (covered under Scheme Target Segments) over the base year (FY2019-20).

The allocation for MSME has been enhanced from Rs 1,000 crore to Rs 2,500 crore.