Telecom PLI Proposes Higher Incentives For MSMEs

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This scheme, as per the estimates of the government of India, will lead to incremental production of around Rs 2.4 Lakh Crores with exports of around Rs2 Lakh Crores over five years

Pursuant to the extraordinary incentive of PLI being provided by Government of India in various sectors, the Cabinet has approved the Production Linked Incentive (PLI) Scheme for Telecom and Networking Products.

This approval comes in wake of very encouraging success of PLI related to Mobile and component manufacturing, which was announced in April 2020 during the height of Covid pandemic. An official press release by the minitry of communications of India noted that for MSMEs, one percent higher incentive is proposed in year one, year two and year three.

“The core component of this scheme is to offset the huge import of telecom equipment worth more than Rs. 50 thousand crores and reinforce it with “Made in India” products both for domestic markets and exports,” read the press release.

It continued, “Minimum Investment threshold for MSME has been kept at Rs 10 Crores and for others at Rs. 100 Crores. Once qualified, the investor will be incentivized up to 20 times of minimum investment threshold enabling them to utilize their unused capacity. The scheme will be operational from 1st April 2021.”

This scheme, as per the estimates of the government of India, will lead to incremental production of around Rs 2.4 Lakh Crores with exports of around Rs2 Lakh Crores over five years. It is expected that scheme will bring investment of more than Rs 3,000 crore and generate huge direct and indirect employment and taxes both.

Financial Year 2019-20 shall be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes. Support under the Scheme will be provided to companies/entities engaged in manufacturing of specified telecom and networking products in India.

Eligibility will be further subject to achievement of a minimum threshold of cumulative incremental investment over a period of four years and incremental sales of manufactured goods net of taxes (as distinct from traded goods) over the Base Year 2019-2020. The cumulative investment can be made at one go, subject to annual cumulative threshold as prescribed for four years being met.

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