The union cabinet has approved the production-linked incentive (PLI) for manufacturing of telecom and networking equipment in the country, with an outlay of Rs 12,195 crore over a period of five years.

The announcement was made by union minister of electronics and information technology Ravi Shankar Prasad during a press meet on cabinet decisions in New Delhi on February 17.

The scheme, which will come into effect from April 1 this year, will give a boost to domestic manufacturing as well as attract large investments in the production of telecom equipment. In other words, the aim is to promote local manufacturing, thereby reducing import dependency.

The scheme is expected to pave the way for incremental production of nearly Rs 2.4 lakh crore apart from attracting investments of over Rs 3,000 crore. It is also likely to lead to the generation of nearly 40,000 direct as well as indirect job opportunities and raise tax revenue of Rs 17,000 crore from telecom equipment, including core transmission equipment, 4G/5G next-generation radio access network and wireless equipment, access and customer premises equipment, Internet of Things access devices, other wireless equipment, enterprise equipment like switches, routers, etc.

Prasad asserted that 20,000 jobs have been given by a mobile manufacturer, and an additional 1 lakh direct and 3 lakh indirect jobs will be created by a mobile manufacturer by next year. The government will also shortly announce a plan to boost local manufacturing of IT products such as laptops and tablet PCs.

The ministry of communication and information technology, in a statement, has said the eligibility for the scheme will be subject to achieving a minimum threshold of cumulative investment and incremental sales of manufactured goods. Further, it stated that 2019-20 will be considered the base year for computing cumulative incremental sales of manufactured goods net of taxes.

This scheme proposes higher incentives for micro, small and medium enterprises (MSMEs). The government has proposed 1 percent higher incentive for MSMEs in the first three years. For MSMEs, while the minimum investment threshold is set at Rs 10 crore, for others it is Rs 100 crore.

Eligible investors shall be incentivised up to 20 times the minimum investment threshold, thereby helping them to utilise their unused capacity, the statement added.

The move is part of an earlier plan to expand the success of the PLI scheme in mobile devices and electronic components, medical devices and active pharmaceutical ingredients.

(Edited by : Jomy)