This puts immense pressure on smaller companies which might have to go through bigger players trying to outdo them by committing higher investments
According to a report by The Financial Express, the department of telecommunications (DoT) has framed the draft guidelines for the production-linked incentive (PLI) scheme for telecom equipment in such a manner that will provide an edge to companies committing higher investments to qualify for it, which could potentially lead to intense competition among component makers wishing to reap the incentive benefits.
Major telecom equipment manufacturers like Nokia, Ericsson, Cisco as well as contract manufacturers like Dixcon and Foxconn may apply for the yet-to-be-announced PLI scheme, but the fight to qualify for it might be tougher than the prior ones.
As per the publication, the draft guidelines would need these companies to agree to invest over and above the base threshold, and if the set outlay gets exhausted once a few companies commit higher amounts, then chances are there that some may get left out.
The DoT plans to select a total of 20 companies under the scheme – 10 from the micro, small and medium enterprises (MSMEs) and 10 from the general pool which could include global telecom vendors like Nokia, Ericsson, etc. However, with the guidelines being set, it is not necessary that 10 companies would be able to make the cut within the 10 open for non-MSME firms.
This puts immense pressure on smaller companies that might have to go through bigger players trying to outdo them by committing higher investments, highlights the report.
Nonetheless, no such higher investment criteria have been laid down for MSME firms as the government does not expect them to invest much higher than the base amount of Rs 10 crore.
The draft is expected to be announced this week once it is green-lit by the Ministry of Commerce, Department for promotion of industry and internal trade (DPIIT) and Niti Aayog.
