Samsung is the latest global gear maker to come on board the government’s telecom equipment production-linked incentive (PLI) scheme and this will be its first such investment into telecom gear manufacturing in India, joining global peers Nokia and Jabil (Ericsson) in making 5G equipment locally.
“Samsung has proposed an investment of Rs 400 crore and plans to start production of 5G/4G equipment at Kanchipuram,” the official said.
Samsung did not officially respond to ET’s query till the time of going to press.
The demand for 5G equipment has soared as both Reliance Jio Infocomm and Bharti Airtel are rolling out 5G networks and the South Korean conglomerate has bagged deals from both Jio and Airtel for supplying 5G radios for select circles.
Samsung entered the Rs 12,195-crore telecom equipment PLI scheme after giving it a miss last year because of lack of opportunities in the equipment supply space. That was because Jio was its only customer for 4G, and 5G rollouts had not happened last year. However, with the two major telcos rolling out 5G networks, Samsung has bagged deals from both.
Earlier this year, Samsung got approval as a ‘trusted’ source from the National Security Council Secretariat (NSCS).
Getting such an approval is mandatory for being selected by telecom operators to install equipment on their network.
The security clearance is part of a directive that came into effect from June 15 last year, which mandates that operators can only procure equipment from trusted sources.
The Department of Telecommunications (DoT) had notified the PLI scheme for telecom equipment manufacturing with an outlay of Rs 12,195 crore spread over five years, on February 24 last year.
A total of 42 firms, including 28 micro, small and medium enterprises (MSMEs), have been selected under the scheme and they have made a total investment commitment of Rs 4,115 crore. Of these, 17 have applied for an additional incentive of 1% under the design-led manufacturing criteria.
The scheme offers incentives in the range of 4% to 7% for different categories and years. For MSMEs, a 1% higher incentive is proposed in year 1, year 2 and year 3.
Financial year 2019-20 will be treated as the base year for computation of cumulative incremental sales of manufactured goods net of taxes.
In April, the scheme was amended to facilitate design-led manufacturing with an additional incentive rate of 1% over and above existing incentive rates.
Further, additional telecom and networking products were added to the list of eligible products.
Apart from the amendment, the scheme was extended by one year. The government has clarified that companies can claim benefits for only five years and not six years. The companies will be given an option to choose FY 2021-22 or FY 2022-23 as the first year of incentive.