India has recently announced the PLI scheme for telecom and networking products. The scheme that kicks off beginning the new fiscal from April 2021 is part of the plan to strengthen the Make in India drive and enable the country to become self-reliant in the supply of the core components essential for Digital India. It follows the November 2020 rollout of a similar PLI scheme for large-scale electronic manufacturers that has so far attracted Rs 34,000-crore investment from some of the top mobile companies.
The telecom and networking products exports market worldwide stands at USD 100 billion. India is looking at augmenting its manufacturing capacity in the sector and becoming the alternate destination for high-end technology products by attracting large investments from global players and encouraging promising domestic champion companies to seize the emerging opportunities and become big players in the export market.
According to estimates, besides offsetting the import of telecom equipment worth Rs 50,000 crore, the PLI scheme is expected to generate more than 40,000 direct and indirect jobs. It is also likely to bring in tax revenues of Rs 17,000 crore from telecom equipment manufacturing, including core transmission equipment, 4G/5G radio access network and wireless equipment, access and customer premises equipment, internet of things access devices, other wireless equipment, and enterprise equipment such as switches and routers.
The intention is good, but many in the industry are worried that the government may get burdened by the expectation to show tangible results in the short term. Any effort to gain and show quick results may prove foolhardy; Rome was not built in a year.
The other big concern is the ability of the local telecom infrastructure products manufacturers to support the country’s 5G rollout. Globally, there are only a few companies that have the ability – Chinese companies Huawei and ZTE, Finnish major Nokia, South Korean giant Samsung, and Swedish company Ericsson. And Indian players are still far away in the game.
Rising above the anti-China rhetoric, the Department of Telecom (DoT) has taken the right decision by agreeing to create a portal where it will list manufacturers, including Chinese suppliers that pass the stringent security criteria being finalized by the country’s National Cybersecurity Coordinator. According to a report by the Mint, the DoT will be issuing the final list of approved manufacturers on the portal that will be launched in June. While the telcos will be free to select products and vendors from the approved list, in case the equipment supplied by vendors is not on the pre-approved list, they will have to upload the details of the products and the company on the portal for verification and approval.
This is indeed a well-thought decision and will help India meet its short- and mid-term telecom equipment requirements. In the long run, let us hope the telecom industry is able to meet the expectation.