InvestorQ : How do you see the impact of the latest PLI announcement on telecom equipment companies?
Rashi Mehra made post

How do you see the impact of the latest PLI announcement on telecom equipment companies?

Archita Jajjoo answered.
1 year ago

While the product linked incentives or PLI was announced last year and reiterated in the budget, the sector wise timetable was still missing. The government has taken the initiative by announcing the PLI scheme specifically targeted at telecom equipment companies. The purpose of PLI is to generate local jobs, boost domestic production and also save foreign exchange by substituting imports.

On these lines, the government has made a significant move by announcing product linked incentives or PLI plan worth Rs.12,195 crore targeted specifically at telecom equipment manufacturers that make critical equipment that go into provision of telecom services in India. Currently, such equipment are predominantly imported and the government had already identified that as one of the focus areas for the Atma Nirbhar plan.

This is likely to result in manufactured output value of Rs.244,000 crore from the manufacture of telecom equipment locally. What is more interesting and relevant from a domestic economic perspective is that it will provide direct and indirect jobs to nearly 40,000 personnel. Of course, the downstream will be much larger if you calculate the spin off businesses that it will generate for smaller entrepreneurs and MSMEs.

Out of this incremental output worth Rs.244,000 crore, exports are expected to be worth Rs.195,360 crore, which will be a major boost to rectifying the trade deficit. It will also give a big boost to the “Make in India” program. In addition, this move is expected to bring in foreign flows of Rs.3,000 crore, which is a good starting point. Most importantly, it reduces the current dependence on imports for telecom equipment.