Telecos want revised PLI to fix select gaps

It should have been done earlier. The PLI should be extended to mechanical machinery and machine tools - Rajiv Mehrotra, Chairman, Vihaan Networks, tells Bizz Buzz

Telecom Tangle

• Any product or equipment doesn’t meet 100% compliance, nor is it required
• BSNL, MTNL, BBNL, Railways, Defence defer 100% compliances for some, not for others

New Delhi: It is widely believed that the production-linked incentive (PLI) scheme in the telecom sector has been a success. In October 2023, Telecom Minister Ashwini Vaishnaw said telecom companies had invested Rs2,419 crore under the PLI, which created 17,753 jobs. Everyone in the telecom industry doesn’t seem quite impressed by the official claims, though many industry leaders find the PLI scheme good.

Vihaan Networks Chairman Rajiv Mehrotra is among those who are all praise for the PLI scheme, saying that it should have been done earlier. “The PLI should be extended to mechanical machinery and machine tools,” he told Bizz Buzz.

But Telecom Equipment Manufacturers Association (TEMA) chairman emeritus NK Goyal is not much enthused by the scheme. It’s a well-known fact that any product or equipment does not meet 100 per cent compliances, nor is it required, he said. “There is general tendency of procurement agencies like BSNL, MTNL, BBNL, Railways, and Defence to defer 100 per cent compliances for some and not for others.”

This arbitrariness is hurting domestic manufacturers. “It has been seen that domestic manufacturers are mandated to show 100 per cent compliances,” Goyal said.

Another industry player supported this assertion, pointing out that foreign players are often given preferential treatment in terms of compliances. The Department of Telecommunications (DoT) has been extending the mandatory certification and testing of telecom equipment for years, he said.

Industry representatives also grumble about lower import duties. In fact, a day before Budget 2024, the government slashed the import duty on some parts used in making mobile phones to 10 per cent from 15 per cent. While this will help phone makers like Apple and Xiaomi, Indian manufacturers do not see this as good news.

Goyal said that the reason the automobile industry is doing well is because duties are high in this sector, whereas these are very low in the telecom manufacturing industry. He highlighted the fact that there are no major Indian phone makers.

Then there is also the issue of local purchase and employment generation. “At present, there are no compulsory requirements for buying local components and job creation. There is a need for fundamental change in the PLI policy to provide mandatory local value addition and local job creation,” Goyal said.

Evidently, the government is cognizant of the problems faced by the industry. Last week, Telecom Secretary Neeraj Mittal said the government is looking to come up with an improved and better telecom PLI scheme.

Talking to reporters at the Bharat Telecom 2024 event organized by the Telecom Equipment and Services Export Promotion Council, the Secretary said: “The new scheme which will be a better scheme, for that we look forward to suggestions from the MSME industry to see where we can improve.”

The domestic industry hopes that the revised scheme would be better.