Government Set to Provide Incentives to Boost Telecom Equipment Production

New Delhi: Telecom equipment majors are likely to get some relief as the government has decided to provide incentives soon for increasing their production capacity. The move of the government aims to reduce dependence on imports from other countries. The incentives worth Rs 400-crore will be released in a week or so to some shortlisted firms after thorough verification in this regard. The government has already released some incentives to one or two companies, and the rest will be done soon, the source privy to development said on Tuesday.

The crucial decision of the government came after telecom equipment makers submitted their demand before the concerned department to provide incentives for increasing value addition in manufacturing to mostly reduce their dependence on imports. The government has also been informed about some companies who have been making fixed wireless access equipment that will be in high demand in India and other global markets.

“As the government is constantly monitoring the manufacturing of all the telecom equipment makers, it wants to make them self-reliant and support their production venture. Recently, some companies also approached us in this regard and sought help to augment their manufacturing capacity. So, the government has decided to provide Rs 400 crore incentives initially to them in order to avoid massive imports and increase their home productions as well to attract investment in the sector,” the source said.

“We have learnt that many players like HFCL and Tejas Networks are making telecom equipment here and others want the same. Even though local production is seen increasing, we’re still importing most of the components from other countries. The government should provide some support for local manufacturing of these components. As the top ministry officials were apprised of the growth opportunity that can emerge for local players, the government, however, wants local players to gain scale,” the sources said.

The government is also expecting local telecom equipment makers to become the primary source of supplies for Indian telecom giants like Bharti Airtel, Vodafone Idea and Reliance Jio while also looking at exports. “The ministry officials were receptive to the demands and would hold further discussions with the industry to promote their manufacturing. While there are existing policies, incentives for making the components locally should also be considered. It will help in faster development of the ecosystem," the source added.

The government kicked off the production-linked incentive or PLI scheme for telecom and networking products manufacturing in India in February 2021 with an outlay of Rs 12,195 crore. As per data, the scheme has attracted investments of Rs 1,800 crore as of July this year, which has been channelled towards production of Rs 22,000 crore and exports of Rs 6,700 crore during the financial year.