Concurrent PLI scheme, dedicated fund, tax sops: TRAI moots ways to spur networking, telecom gear manufacturing

New Delhi: TRAI has mooted 'concurrent PLI scheme' focussing on components and sub-assembly manufacturing to facilitate collaborated production activities, as it released an extensive set of recommendations to promote manufacturing of networking and telecom gear in India through tax benefit, dedicated master fund and other sweeteners.

With a sharp gaze on goals of scaling domestic production and local value addition in global value chains, TRAI in its recommendations favoured additional two per cent benefit under the design-led PLI scheme for product lines meeting a certain criteria, while also talking of a dedicated 'Networking and Telecommunications Equipment Development' fund. In order to spur innovation and encourage industry's drive towards beneficially owned resident Intellectual Property Rights (IPRs), lower corporate income tax has also been recommended.

This would apply if the enterprise is continuously engaged in R&D driven manufacturing and attains half of its turnover based on IPRs owned, TRAI said in its recommendations. A dedicated Telecom Software Development Fund with initial committed corpus of Rs 1,000 crore should be established under Public-Private Partnership mode with Rs 3,000 crore minimum corpus, by seeking participation from venture capital funds, TRAI said.

"In context of PLI scheme, TRAI has recommended that there should be a concurrent PLI scheme focussing over components and sub-assembly manufacturing to facilitate collaborated manufacturing activities. Further, the schemes should imbibe local value addition norms in its future-format and higher incentives proportionate to value addition should be available," a TRAI release said. Under the design-led PLI scheme, it said, beyond the one per cent benefit, another slab of additional two per cent benefit be introduced for such product lines that yield minimum local value-addition of 75 per cent where the components by value terms, used in the manufacturing of the specific end products are manufactured in India. Telecom Service Providers (TSPs) should be nudged to deploy indigenously manufactured equipment by reducing their Applicable Gross Revenues on annual net basis, by an amount equivalent to the aggregate certified value of such indigenous products deployed in respective telecom networks during a financial year.

This shall widen market access for indigenous manufacturers, TRAI reasoned. Apart from the Production Linked Incentive (PLI) scheme and Preferential Market Access (PMA), the formula suggested by the sector regulator to the government also touched upon areas like catering to financing requirement, tax relief, promoting entrepreneurship, telecom products development clusters, and treating 'telecom software' as a separate product category. "To spur innovation and to encourage industry's drive towards beneficially owned resident Intellectual Property Rights (IPRs), lower corporate income tax has also been recommended. This would apply if the enterprise is continuously engaged in R&D driven manufacturing and attains half of its turnover based on IPRs owned," TRAI said. Further, the regulator recommended that Telecom Products Development Clusters (TPDCs) should be established within the approved Electronics Manufacturing Clusters (EMCs) or nearby with host of common facilities.