Context: The Union Cabinet has approved the production-linked incentive(PLI) scheme for the telecom sector.

About the production-linked incentive(PLI) scheme for the telecom Sector

• Aim of the scheme: It will make India a global hub for manufacturing telecom equipment. Moreover, it will create jobs and reduce imports especially from China.
• Focus of the scheme: The scheme will offset the huge import of telecom equipment worth more than Rs 50,000 crore. By that, it will encourage the foreign manufacturers and domestic manufacturers to set up production units in India.  

Coverage: The scheme will cover domestic manufacturing of equipment such as

• core transmission equipment,
• 4G/5G and next-generation radio access network and wireless equipment,
• Internet of Things (IoT) access devices,
• enterprise equipment such as switches and routers

Duration of the Scheme: The scheme will be operational from April 1 and will run for the next five years.
Eligibility: The eligibility for the scheme will be subject to;

• Achieving a minimum threshold of cumulative investment
• incremental sales of manufactured goods, with 2019-20 as the base year.

Incentives: For the inclusion of MSMEs in the scheme, the minimum investment threshold has been kept at Rs 10 crores while for others it is Rs 100 crore. Further, for MSMEs, It proposes a 1% higher incentive in the first three years.
Significance of the scheme

• The Government Schemes may lead to an incremental production of about Rs 2.4 lakh crore with exports of about Rs 2 lakh crore over five years. Moreover, it may bring in investments of more than Rs 3,000 crores.
• With the inclusion of telecom equipment manufacturing under the ambit of PLI schemes, the total number of sectors under such programmes stands at 13.

Benefits

• It will make Indian manufacturers globally competitive
• Attract investment in the areas of core competency and cutting-edge technology
• Ensure efficiencies
• Create economies of scale
• Enhance exports
• Make India an integral part of the global supply chain