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The finance minister on Tuesday announced the launch of a PLI scheme towards design led manufacturing of 5G equipment in her budget speech. A senior official told ET that the funds for the PLI scheme would come from the already existing telecom equipment PLI scheme.
The corpus for the telecom equipment PLI is Rs12,951 crore but the government expects to offer incentives worth only around Rs 7,400 crore, leaving surplus funds.
“We feel there is a need to incentivise telecom equipment design capabilities in 5G, we need Indian DNA in the design and so we decided to divert part of the (telecom equipment PLI) funds towards it,\" the official added.
He added that the 5G design and equipment manufacturing in the country needed separate impetus from the current telecom equipment PLI scheme.
“The scheme for design-led manufacturing to be launched for the 5G ecosystem as part of PLI will be a boost to the overall telecom and electronic sectors. It will also provide and promote research and development of technology and solutions and will enable affordable broadband and mobile communication,” said Sanjay Gupta who is the Vice President and India Managing Director, at chip maker NXP Semiconductors.
Nitin Bansal, managing director for Ericsson in India, added that the design-led initiatives for 5G under the PLI scheme will strengthen the ‘Make in India’ initiative, and contribute to making India a global manufacturing hub.
The telecom department had approved 31 proposals under the telecom equipment PLI scheme, entailing investments of Rs 3,345 crore over four-and-a-half years. The companies selected for the PLI scheme included Nokia India, Ericsson’s Jabil unit, HFCL, Dixon Technologies, Flextronics, Foxconn, Coral Telecom, VVDN Technologies, Tejas Networks Akashastha Technologies and GS India.
But gear manufacturers have so far produced equipment worth only Rs 7,007 crore with Rs 299.56 crore worth investment as on December 31, under the scheme, driven mainly by large multinational players such as Ericsson and Nokia.
A number of domestic and smaller multinational contract manufacturers though had written to the telecom department, both directly and through the industry body the Cellular Operators Association of India, seeking a year’s extension to meet targets under the scheme. They said that they had received just four months to meet the first-year milestones.