The incentive rates for the Indian government’s Product-Linked Incentive Scheme for telecom and networking products will stand at 6% for the first two years, 5% in the next two years, and 4% for the fifth year. The rates for the first three years are higher by 1% for MSMEs. Union Minister for Electronics & IT and Communications RS Prasad announced the details on Wednesday.
The PM Narendra Modi led goverment had announced PLI-scheme in 10 key sectors, including telecom, in November 2020, earmarking Rs 12,195 for the telecom sector. The intention is to increase local manufacturing of 4G/5G and wireless equipment, IoT access devices, and enterprise equipment such as routers and switches.
The total incentive amount will be spread over five years. PLI can be considered a kind of subsidy in the form a direct payment from the government’s budget to goods made in India. Effective April 1, 2021, the past financial year of 2019-20 will be considered the based year. Incentive rates will be determined based on incremental sales made each year.
Manufacturers that achieve a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes will be eligible for the scheme. Qualified investors will be incentivised up to 20 times of minimum investment threshold, the government has claimed in a statement.
The government expects the scheme to lead to incremental production of around ₹2.4 Lakh Crores with exports of around ₹2 Lakh Crores over 5 years, with FDI expected to be over Rs 3,000 crore.