Telecom gear makers push for more incentives

Indian telecom equipment makers have asked the government to provide incentives for increasing value addition in manufacturing to reduce their dependence on imports, even as some companies have begun making fixed wireless access equipment that will be in high demand in India and other global markets.

In a meeting with senior ministry officials last week, companies making equipment in India suggested providing direct financial incentives to reduce dependence on imports, two people aware of the development said.

“There are companies already making telecom equipment here, for instance, players like HFCL and Tejas Networks, among others. While local production is going up, we’re still importing most of the components. The government should provide some support for local manufacturing of these components,” said one of the people aware of the details of the deliberations.

“Senior ministry officials were apprised of the growth opportunity that can emerge for local players. The government also wants local players to gain scale. While there are existing policies, incentives for making the components locally should also be considered. It will help in faster development of the ecosystem,” a second executive said, asking not to be named.

The executive added that the ministry officials were receptive to the demands and would hold further discussions with the industry.

The demand from the industry has come even as production-linked incentive schemes (PLIs) have taken off for fully made products. The government started the PLI scheme for telecom and networking products manufacturing in India in February 2021 with an outlay of ₹12,195 crore. The scheme has attracted investments of ₹1,800 crore as of July this year, which has been channelled towards production of ₹22,000 crore and exports of ₹6,700 crore during the financial year.

The government is also expecting local telecom equipment makers to become the primary source of supplies for Indian telecom players like Bharti Airtel, Vodafone Idea and Reliance Jio while also looking at exports. Telecom minister Ashwini Vaishnaw said last week that Indian telecom gear makers were already exporting to more than 70 countries, even as 80% of the equipment used in 5G technology was being produced locally. “There are so many companies which have started design and manufacture in India, and today they have become exporters of equipment. India-designed and manufactured telecom equipment is exported to a total of 72 countries today,” he had said.