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DoT Launches Scheme for Design-Led Manufacturers, Extends PLI Scheme Duration for 5G Ecosystem

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By Press Trust of India | Updated: 21 June 2022

The Department of Telecom has launched an incentive scheme for design-led manufacturers and extended the duration of the Rs. 12,195 crore production-linked incentive (PLI) scheme by a year, an official statement said on Monday.

The incentive for design-led manufacturing is part of the PLI scheme which was notified on February 24, 2021. The DoT has amended the clause and made the scheme effective from April 1, 2022.

“With the objective to build a strong ecosystem for 5G, the Union Budget 2022-23 has proposed to launch a scheme for design-led manufacturing as part of the existing PLI scheme. After consultations with stakeholders, the guidelines for the PLI Scheme for telecom and networking products have been amended to introduce the Design-led Manufacturing with additional incentive rates,” the statement said.

Telecom equipment makers who use 50 percent of Made in India components in their product will be eligible for the design-linked incentive.

The new version of telecom PLI heeded to the demand of domestic manufacturers by removing the 15 percent cap on investment to be made for research and development.

The PLI has provision to provide incentive in the range of four to seven percent. The design-led manufacturers will get an additional one percent incentive over existing slabs under the PLI scheme.

The application window will open from June 21 till July 20. The incentives will be given from the Rs. 4,000 crore which is left from the total outlay.

“Further, DoT based on feedback from stakeholders including the selected PLI applicants, has decided to extend the existing PLI Scheme by one year. The existing PLI beneficiaries will be given an option to choose financial year 2021-22 or financial year 2022-23 as the first year of incentive.”

“DoT has also approved the addition of 11 new telecom and networking products to the existing list, based on suggestions from the stakeholders,” the statement added.

The Department of Telecom (DoT) had notified the PLI scheme on February 24 last year, for which a total of 31 companies, including Nokia, Foxconn, Akashastha Technologies, ITI and HFCL Group, were given approval on October 14. The approved companies have committed to make total investments of Rs. 3,345 crore by 2025-26.

The companies interested in the incentive scheme will have to satisfy the minimum global revenue criteria to be eligible. The company may decide to invest for single or multiple eligible products.

The scheme stipulates a minimum investment threshold of Rs. 10 crore for MSMEs and Rs. 100 crore for non-MSME applicants.

Land and building cost will not be counted as investment under the scheme. The allocation for MSME has been enhanced from Rs. 1,000 crore to Rs. 2,500 crore.

“The modification made in the scheme for R&D, adding new products like Open RAN (radio access network) and satellite communication equipment and extending the scheme by 1 year clearly indicates the government’s intent to incrementally incentivise India-led R&D, focus on newer technologies and deeper and widespread manufacturing in India,” EY India partner Kunal Chaudhary said.

The scheme for telecom gear manufacturing in India is expected to encourage the production of equipment worth Rs. 2.5 lakh crore and create direct and indirect employment for about 40,000 people.

The investors can earn an incentive for incremental sales up to 20 times the committed investment, enabling them to reach global scales and utilise their unused capacity and ramp up production.

Industry body ICEA’s Chairman Pankaj Mohindroo said the decisions of the DoT would not only go a long way in supporting the Indian entrepreneurs, but also ensure that India consolidates its position in the global value chain (GVC) of the electronics and mobile phone industry.

“The industry could not have expected a better time for this announcement as the global supply chain has been impacted by the geopolitical tensions after the severe hit of the pandemic. Further, the timing of the decisions also gains significance as the country has already taken a major step forward in telecom with the Union Cabinet approving the 5G spectrum auctions,” Mohindroo said.

Mobiles

Xiaomi Feels Sting of China Covid Curbs With 20 Percent Fall in Q2 Revenue, Smartphone Sales Fall 29 Percent

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By Reuters | Updated: 19 August 2022

Chinese smartphone maker Xiaomi posted a steep drop in second quarter revenue on Friday as the world’s biggest smartphone market shrank, hit by strict COVID restrictions. Sales fell 20 percent year on year to CNY 70.17 billion (roughly Rs. 82,200 crore), missing estimates and marking a steeper decline from the previous quarter, when the company posted its first-ever revenue drop since listing.

Net income fell 67 percent to CNY 2.08 billion (roughly Rs. 2,400 crore), missing analysts’ estimates.

China’s consumer consumption has struggled to rebound from the impact of lockdowns in Shanghai and other cities in the first half of the year.

Data this week showed China’s economy slowed unexpectedly in July, indicating the world’s second largest economy is struggling to shake off the June quarter’s hit to growth from COVID restrictions and prompting a central bank rate cut.

China’s long-stagnant smartphone sector has been especially hit by the downturn, with unit shipments down 10 percent year on year in the second quarter, according to research firm Canalys.

Smartphone sales for Xiaomi, which generate more than half of the company’s total revenue, fell 29 percent.

In 2021, Xiaomi saw a sales surge after it grabbed market share from rival Huawei, whose ability to proscure components was heavily cripled by US sanctions.

Yet the bump was short-lived, and the company’s stock price has tumbled nearly 40 percent since the start of 2022, hit by the slowing Chinese economy and weakening overseas growth.

In India, Xiaomi’s strongest market outside of China, the company has been subject to government probes for allegedly dodging tax regulators.

In April, Indian tax authorities seized $725 million (roughly Rs. 5,800 crore) in assets from the company, claiming it illegally transferred funds abroad under the guise of royalty payents. Xiaomi has denied any wrongdoing.

The weak smartphone market in China and globally has led the company to seek new opportunities.

Xiaomi said earlier this month it had started testing self-driving vehicles in select cities in China.

© Thomson Reuters 2022

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Just Eat Takeaway Grabs Cash, Sells Brazil’s iFood to Prosus for EUR 1.8 Billion

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By Reuters | Updated: 19 August 2022

Technology investor Prosus said on Friday it would pay up to EUR 1.8 billion (roughly Rs. 14,500 crore) to buy the 33 percent stake in Brazil’s iFood from rival Just Eat Takeaway.com that it does not already own. The deal will give Prosus sole control of iFood, considered one of the most attractive food delivery businesses in one of the world’s biggest markets. It also gives Takeaway, which is racing to achieve profitability, a vital cash infusion.

Prosus said it would pay EUR 1.5 billion (roughly Rs. 12,100 crore) in cash and an additional consideration of up to EUR 300 million (roughly Rs. 2,400 crore) for the 33 percent iFood stake. The price amounts to about half the market capitalisation of Takeaway, Europe’s largest meals delivery company, and more than the market value of its rival Deliveroo.

“Increasing our stake to full ownership is a demonstration of our committed and disciplined approach to investment and reflects our confidence in the long-term potential of iFood,” said Prosus Chief Executive Bob van Dijk in a statement.

Takeaway, whose shares have lost two thirds of their value over the past year, had long been seeking to sell the iFood stake, but had been unable to reach terms.

While they were partners in iFood, Prosus and Takeaway had fought bitterly during a 2020 takeover battle for Just Eat, which Takeaway eventually won.

Takeaway CEO Jitse Groen said in August 2021 he had turned down a EUR 2.3 billion (roughly Rs. 18,500 crore) offer for iFood from an unnamed bidder as “inadequate”, as valuations of meals companies soared amid the COVID-19 pandemic.

The price Takeaway is receiving now “represents an equity multiple of over five times” the company’s investments, it said.

According to a disclosures in Takeaway’s half year results last month, iFood had a net loss of about EUR 120 million (roughly Rs. 1,000 crore) in the first half of 2022, although sales grew 28 percent. Prosus said iFood was making about 70 million deliveries per month.

Takeaway said it expected the iFood deal to close in the fourth quarter and that it was continuing to explore “the partial or full sale” of Grubhub, the U.S. meals delivery company it bought last year for $7.3 billion (roughly Rs. 58,200 crore).

© Thomson Reuters 2022

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Cisco Beats Profit Estimates as Positive Sales Forecast Hints at Easing Supply Chain Shortages

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 By Reuters | Updated: 19 August 2022

Cisco gave a positive forecast for first-quarter sales as a COVID-19 recovery in China eases supply chain shortages and helps it meet demand for networking hardware, sending the company’s shares 5 percent higher in extended trading. The results announced on Wednesday suggest networking equipment makers have started overcoming the component crunch that had kept them from tapping a post-pandemic revival in digital infrastructure spending.

“After a challenging April due to the COVID-related shutdowns in Shanghai … overall supply constraints began to ease slightly at the back half of the fourth quarter and continuing into the start of Q1,” Cisco Chief Executive Chuck Robbins said on a post-earnings call.

The networking major expects current-quarter revenue to rise between 2 percent and 4 percent, while analysts predicted it would remain flat, according to Refinitiv IBES data. Annual revenue is forecast to jump 4 percent to 6 percent.

“The guide was good enough because they start lapping stronger year-ago numbers. So the guide for the year and quarter are seen as a sign of confidence by the company,” Elazar Advisors analyst Chaim Siegel said.

Still, rising costs are a cause of concern for the maker of routers, switches and communication tools as it spends more on freight and logistics to ensure a steady supply of components.

After a drop in gross margins in the April-June quarter to 61.3 percent from 63.6 percent, CEO Robbins said higher costs would continue in the short term.

That was reflected in its first-quarter adjusted profit forecast of 82 (Rs. 65.40) to 84 cents (Rs. 66.99), whose midpoint was below estimates of 84 cents.

Fourth-quarter adjusted profit was 83 cents (Rs. 66.20) per share, one cent above estimates. Revenue came in at $13.1 billion (roughly Rs. 1,04,500 crore), beating expectations of $12.73 billion (roughly Rs. 1,01,500 crore).

© Thomson Reuters 2022

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TRAI Deadline for Submitting Views on Community Radio Stations Extended by 2 Weeks

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By Press Trust of India | Updated: 18 August 2022

The Telecom Regulatory Authority of India (TRAI) has granted more time to stakeholders for submitting their views on the issue of allowing not-for-profit companies to set up community radio stations (CRS). In a consultation paper on ‘Issues Related to Community Radio Stations’, the broadcast regulator also sought views on increasing the permission period for operating the radio station from the existing five years to 10 years.

The TRAI had initially asked stakeholders to submit their views by August 17 and counter-comments by August 31. It has now extended the date for submission of comments to August 31 and counter comments by September 14.

CRS serve a local and well-defined community focusing on the day-to-day concerns of its audience and satisfying their specific information and entertainment needs.

As per data provided to TRAI by 52 CRS operators, 16 of them do not broadcast any advertisement, whereas 32 operators run advertisements for five minutes or less per hour.

The consultation papers also sought views on increasing the maximum duration of advertisement per hour from the existing seven minutes of broadcast on CRS.

It also asked for stakeholders’ views on the number of community radio stations run in each district of operation by the not-for-profit organisations, operating in multiple districts.

The government had in 2013 introduced a scheme, ”Supporting Community Radio Movement in India”, for providing financial assistance to strengthen new and existing CRS.

The scheme envisions supporting CRS with resources, capacity and technology to promote growth, especially in remote and rural areas, to enable socio-economic and cultural development of communities.

Any CRS that became functional on April 1 last year and completed three months of its operations is eligible for a one-time financial assistance of Rs 10 lakh.

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Telecom Minister Asks Service Providers to Prepare for 5G Rollout

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By Press Trust of India | Updated: 19 August 2022

Telecom Minister Ashwini Vaishnaw on Thursday asked telecom service providers to gear up for the 5G launch post the issuance of spectrum allocation letters. In a first, the Department of Telecom (DoT) issued spectrum assignment letters on the same day the successful bidders of radio waves made upfront payments.

“5G Update: Spectrum assignment letter issued. Requesting TSPs to prepare for 5G launch,” Vaishnaw wrote on Twitter. The DoT has received payment of around Rs 17,876 crore from service providers — Bharti Airtel, Reliance Jio, Adani Data Networks and Vodafone Idea for the spectrum they won in a recent auction.

The country’s biggest ever auction of telecom spectrum received a record Rs 1.5 lakh crore worth of bids, with Mukesh Ambani’s Jio cornering nearly half of all the airwaves sold with an Rs 87,946.93 crore bid.

Bharti Enterprises founder and chairman Sunil Bharti Mittal said that his company Bharti Airtel received a spectrum allocation letter within a few hours of making an upfront payment to the DoT.

“In my over 30 years of first-hand experience with DoT, this is a first! Business as it should be. Leadership at work-Right at the top and at the helm of telecom. What a Change! Change that can transform this nation – power its dreams to be a developed nation,” Mittal said.

Airtel acquired 19,867.8 MHz spectrum by securing a pan-India footprint of 3.5 GHz and 26 GHz bands and selected purchase of radio waves in the low and mid-band spectrum for Rs 43,039.63 crore.

“Airtel paid Rs 8,312.4 crore towards spectrum dues and was provided the allocation letter for the designated frequency bands within hours.

“E band allocation was given along with spectrum as promised. No Fuss, No Follow Up, No running around the corridors and No tall claims. This is ease of doing business at work in its full glory,” Mittal said.

Airtel has said that it will launch the 5G service this month.

While all telecom operators have opted to make payments in 20 annual instalments, Bharti Airtel paid Rs 8,312.4 crore equivalent to four annual instalments.

Reliance Jio has made payments of Rs 7,864.78 crore, Vodafone Idea Rs 1,679.98 crore and Adani Data Networks Rs 18.94 crore.

Gautam Adani’s group has placed bids worth Rs 211.86 crore for 400 MHz in a band that is not used for offering public telephony services.

“On August 8, 2022, Adani Data Networks Ltd made a payment of Rs 18.9 crore to the Department of Telecommunications (Wireless Planning & Coordination Wing). This is the first of 20 equal annual instalments,” Adani Group spokesperson said.

Ficci Senior Vice President Subhrakant Panda said the ease, speed and transparency of the 5G spectrum auction process is a live example of much-improved ‘Ease of Doing Business’.

Confederation of Indian Industry (CII) said that approval processes across central ministries are getting speedier and more seamless.

“A series of facilitative reforms, aimed at rationalisation and digitisation of regulatory processes and procedures, have started yielding results at the ground level. The reform measures encompass the entire life cycle of a business, from start to exit, dealing with all crucial components of ease of doing business,” CII Director General Chandrajit Banerjee said.

Assocham Secretary General Deepak Sood said that India’s ease of doing business, as explicitly evident in the seamless and expeditious auction and allocation of the 5G spectrum, has improved significantly in the last few years.

“A series of reforms, coupled with a transparent regulatory environment under the dynamic leadership of Prime Minister Narendra Modi, has resulted in an EODB, which is being noted by global and domestic investors,” Sood said.

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Indian Apps, Games Saw 200 Percent Growth in Monthly Active Users on Google Play in 2021: Details

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By Press Trust of India | Updated: 18 August 2022

Indian apps and games saw a 200 percent increase in active monthly users in 2021 compared to 2019, a Google Play official said in a blog post on Thursday. Google Play Partnerships Director Aditya Swamy in the blog said there has been an 80 percent increase in consumers spends in 2021 compared to 2019 on Google Play. “Indian apps and games saw a 200 percent increase in active monthly users and an 80 percent increase in consumers spends in 2021 compared to 2019 on Google Play. Local developers are also finding global audiences with Indian apps and games seeing a 150 percent increase in time spent by users outside India in 2021 compared to 2019 on Google Play,” Swamy said.

Swamy said that India has crossed a major milestone of 100 unicorns — a privately held startup valued at over $1 billion (roughly Rs. 7,900 crore) — and a significant portion of these were businesses powered by apps.

He said the enterprising and thriving ecosystem of developers and startups in the country has helped Google Play, which has completed 10 years in India, create a vibrant ecosystem of amazing apps across categories.

“Especially in the past two years, we have seen apps across categories such as education, payments, health, entertainment, and gaming witness stupendous growth,” Swamy said.

He said that there has been great momentum in gaming too with Ludo King becoming one of the first Indian games to cross 500 million downloads.

Swamy said more than 2.5 billion people in over 190 countries use Google Play every month to discover apps, games, and digital content and more than two million developers work with the organisation to build their businesses and reach people across the globe.

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