Making telecom equipment in India is said to cost 12–13% more than in China, according to TRAI

When compared to India, these nations have considerably more advanced industrial infrastructure and efficient component supply chains. Then, the other nations also provide extra inducements like subsidies and interest concessions.

According to a recent assessment by the Telecom Regulatory Authority of India (TRAI), the cost of making telecom equipment in India is 12–13% higher than it is in China. Even with the incentives that the businesses receive through the Production Linked Incentive (PLI) programme, this remains the case. Even in Vietnam, manufacturing the identical telecom equipment costs 3% less than it does in India. If PLI benefits weren't taken into account, the relative cost difference would increase by an additional 4%, placing India at the higher end of the spectrum.

In order to understand how even Vietnam is able to produce the equipment at a lower cost than India, TRAI researched the regulations for the Vietnamese market. Many products are free from import tariffs in Vietnam. These include items that are brought in for re-export, and the tools and supplies needed to make export goods are also exempt. Additionally, import duties are waived for any raw materials or component that cannot be manufactured domestically. Additionally, there are credit incentives as well as corporate tax benefits. Even China has regulations in place to promote more regional production, which has a number of advantages.

The identical equipment is more expensive to manufacture in India than it is in China or Vietnam for a variety of reasons. First of all, when compared to India, these nations have considerably more advanced industrial infrastructure and efficient component supply chains. Then, the other nations also provide extra inducements like subsidies and interest concessions.

"Some stakeholders have claimed that domestic manufacturers are more expensive to produce than global OEMs because of higher value addition costs, insufficient availability of highly skilled manpower, a lack of automated manufacturing facilities, additional cost due to foreign exchange hedging arrangements & cross-border duties on imported components, higher operational expenditure due to a lack of economies of scale, and higher energy costs," according to TRAI.

In addition, India's interest rates are around 5% higher than those found elsewhere in the world. The government, the regulator, and the stakeholders must collaborate to provide the optimal environment in order to increase local production and pique MNCs' (Multinational Companies) interest in investing more in producing in India.

According to a Statista report, In financial year 2020, the market size of telecommunication equipment in India reached around 335 billion Indian rupees, a decrease from the previous year. The leading players in this market at the time were Ericsson, Huawei, Nokia and Samsung. With the deployment of 5G and wider coverage of existing technology, this segment has seen tremendous growth in the upcoming years.

With the implementation of the Production Linked Incentive (PLI) schemes for the 13 sunrise sectors, India is experiencing phenomenal growth in domestic manufacturing. Under the PLI plan, which was set up for the manufacturing of telecom equipment, the government approved a request from 31 companies last year.

Over a four-year period, the corporations committed to investing INR 3,345 crore. The initiative, which will be in place as of 1 April 2021, intends to establish India as a new centre for the production of telecom equipment and support domestic businesses. The incentive under the programme will be offered for a period of five years, from 2025 to 2026, and will range from 4 to 7 percent of the additional sales of manufactured goods over the base year.