A new incentive scheme to support local manufacturers

After the introduction of a set of duty reforms and various incentive schemes aiming to encourage domestic manufacturing, the Indian government decided to revamp such measures, targeting import heavy sectors and providing additional benefits to local SMEs, through the Production Linked Incentive (PLI) scheme.

The scheme reform covered 13 sunrise sectors comprising of Electronics, Pharma, Telecom, IT hardware, Batteries, Auto etc. Of the 13 sectors, the Government strongly focused on the Telecom sector due to the recent security concerns and excessive import dependence.

The incentive under the scheme will be provided to eligible applicants for a period of five years effective from 1 April 2021 with a condition of minimum incremental investment and incremental sales. The scheme targets in particular local SMEs and Startups with a 1% additional incentive for the first three years.

The eligible products under the scheme are core transmission equipment, 4G/5G, next-gen RAN and wireless equipment, access and customer premises equipment, IoT access devices, and other wireless equipment and enterprise equipment.

Such measures might affect IP and business strategies of multiple European operators, rendering joint ventures with Indian partners and the decentralization of production facilities more appealing.