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Business News/ Opinion / Views/  Telecom success could pave India’s path to self reliance

As India embarks on its journey of an Amrit Kaal (literally, an auspicious period) towards 100 years of freedom in 2047, technology and digital infrastructure will be key drivers of inclusive economic growth. A study by the Indian Council for Research on International Economic Relations (Icrier), found that a 10% increase in internet penetration can increase the country’s gross domestic product (GDP) by 1.08%. India has witnessed a major technology transformation in the last five years and emerged as the second fastest growing digital economy (McKinsey, 2019), with Indian companies having developed competence in high-quality manufacturing across the value chain, ranging from the manufacture of smartphones to network equipment and optical fibres.

Make in India for the domestic market as well as exports: As the second largest mobile phone manufacturer in the world after China, India is in a fairly good position. The Indian smartphone market was valued at $139 billion in 2021 and is expected to reach $281 billion by 2028, growing at a compound annual growth rate (CAGR) of 10.5%. The size of the Indian optical fibre and accessories market is projected to reach $1.66 billion by 2026, at a CAGR of 17.2% from 2019 to 2026. This presents an opportunity for these sectors to emerge as champions of the government’s ‘Make in India’ initiative, catering not only to the domestic market, but also export markets as the government negotiates trade agreements with major export destinations.

On the domestic front, there is a fundamental need to ensure widespread fiberization across the country for telecom proficiency. Currently, only 33% of towers in India are fiberized, which is dwarfed by the number in developed countries, placed at beyond 70% of their total. While this gap remains wide, India is more than capable of creating its own infrastructure to deliver indigenous 5G services.

With Prime Minister Narendra Modi’s Digital India programme laying a strong foundation for the enhancement of Indian technological capabilities, the country’s Atmanirbhar mission of self-reliance seems to be yielding tangible gains in this domain.

Sustaining high and inclusive growth would also depend on fast-track broadband connectivity, which in turn will generate high demand for digital infrastructure. Anticipating this, in the past decade, Indian manufacturers have invested more than 5,000 crore in optical fibre manufacturing facilities. This has created around 400,000 jobs by way of direct and indirect employment. India’s annual optical fibre capacity has already increased to around 100 million fibre km, while the domestic consumption is around 46 million fibre km. Indian manufacturers are thus confident of supporting the country’s rising demand as government initiatives like the Bharatnet Phase III and Smart City missions, plus 5G rollout due in September 2022, take effect. India’s import dependency in this field is low. Strengthening domestic manufacturing capabilities while promoting exports will help the country emerge as a leading manufacturing hub, globally.

Positive government interventions: The government has come up with a variety of schemes and policies, like the Production Linked Incentive (PLI) scheme, to support the sector’s expansion. The Centre has also understood the need for a mix of trade promotional and remedial measures to unlock the full potential of the domestic telecom industry.

Among the efforts made by the government to ensure the sector’s orderly development at a time of global anxiety over the possible misuse of telecom equipment in ways that could go against our national interests, there is the trusted product initiative, by which clearances are given to trusted products that telecom operators can install in their networks under the National Security Directive on the telecommunication sector. This framework can also act as a tool to restrict the import of telecom components from certain countries.

Strengthening India’s advantage: The country awaits the rollout of 5G services later this year, an event that would take the Indian telecom market further up the sophistication curve. This launch, along with favourable policies, will open the door wider for investment by private players in various services that require state-of-the-art connectivity.

India is a key participant in international supply chain resilience initiatives, and with several trading partners willing to source products and services from the country, we are well placed to play a bigger role in global technology product manufacturing and exports. Our domestic industry is equipped to tackle the growing demand, and therefore it is crucial that the policy framework is conducive to catapulting this still-nascent sector towards not just domestic but also global success. The country’s policies and regulatory framework should continue to foster the industry’s growth in alignment with the ‘Make in India’ vision.

For technology to drive inclusive growth in India, manufacturers must scale up their capabilities and invest in R&D and innovation. Along with adequate government support, this will help make India self-reliant.

These are the authors’ personal views.

Arpita Mukherjee & Eshana Mukherjee are, respectively, a professor and research associate at the Indian Council for Research on International Economic Relations 

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Updated: 18 Aug 2022, 10:54 PM IST
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