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The department of telecommunications has amended the performance-linked incentive scheme for the telecom sector, adding design-led manufacturing and announcing additional incentives of 4,000 crore for five years beginning 1 April.

In a notification on Monday, DoT extended the PLI scheme for telecom by a year offering existing beneficiaries the option to choose FY22 or FY23 as the base year. The government has also added 11 telecom and networking products to the list under the scheme.

The facilities announced on Monday will be in addition to the PLI benefits announced in February 2021, with a financial outlay of 12,195 crore. As part of it 31 companies, including seven global and eight domestic firms, were approved.

The design-led scheme follows the government’s announcement in the Union Budget in February. The incentives will be based on incremental sales of manufactured goods, ranging between 4% and 7% for different categories. MSMEs will get additional 1% incentive in the first, second and third years.

Experts said the scheme had come at an opportune time since India can bridge the gap created by the global supply chain constraints due to geopolitical tensions.

“Removing restrictions on the research and development expenditure, which will be counted as investment, adding new products like Open RAN and satellite communication equipment, and extending the scheme by a year clearly indicates the government’s intent to incrementally incentivize India-led R&D, focus on newer technologies and deeper and widespread manufacturing in India," said Kunal Chaudhary, partner, EY India.

“The decisions will not only go a long way to support entrepreneurs, strengthen the industry, but also ensure India consolidates its position in the global value chain of the electronics and mobile phone industry," said Pankaj Mohindroo chairman, Indian Cellular and Electronics Association, which represents handset makers in India.

For promoting design-led manufacturing, it has sought applications from 21 June. “It is aimed at encouraging R&D- driven manufacturing in India and enhance contribution to the global value chain as envisaged in National Digital Communication Policy, 2018," DoT said.

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