India must follow an inclusive and strategic approach to protect its telecom ecosystem, without compromising on the growth of markets

India today stands at the cusp of another telecom revolution. On one hand, we have the 5G technology all set to transform the mobile world while, on the other hand, the ambitious BharatNet project can revolutionise the economy in rural India through a robust broadband infrastructure.

India today is the world's second-largest mobile market. We are also the second biggest market in terms of broadband users. Our teledensity in rural areas has crossed the 60 per cent mark. India is one of the world's largest data consumers. We are fast moving towards a total digital economy. These facts showcase the Indian telecom market's splendid journey in more than the last two decades.

The Government has once again renewed its focus on the telecom market. The latest buzz is the introduction of the Production-Linked Incentive (PLI) scheme for the telecom sector which the Union Cabinet recently approved with a budgetary outlay of `12,195 crores to promote manufacturing of telecom and networking products in India.

Through this policy, India will move towards self-reliance in telecom manufacturing. By incentivizing large-scale manufacturing in India, domestic value addition will increase gradually. The provision of a higher incentive to MSME will encourage domestic telecom manufacturers to become part of the global supply chain.

However, the industry feels that the Government should ensure reservation for procurement of ‘Made In India’ products for domestic consumption, besides granting an extension of tax benefits for telecom industries covered by the PLI scheme. What is also needed is the inclusion of specialised service sectors like submarine cable-laying and maintenance under the PLI. All this will make India self-reliant in the manufacturing of telecom gears.

One area of concern which the government has failed to address over the years is the establishment of the semiconductor industry which is the backbone of the microelectronics industry. There are several huge gaps that need to be plugged in to ensure India's smooth entry into the big manufacturing league, which today is controlled by the western nations and China.

In the past, the government took some half-hearted initiatives for chip manufacturing. A semiconductor laboratory was set up long back, but this could not meet the demand and requirements of the Indian industry due to a lack of proper vision and planning. To chart the success story in chip manufacturing, the government needs to set up at least a few industries in India directly or under the PPP model with the assurance that the manufactured products are to be consumed in India itself.

One important aspect of the telecom revolution is the fast growth of rural telephony with a special emphasis on rural broadband. Under the BharatNet, Prime Minister Narendra Modi has set up an ambitious target of taking fibre to six lakh villages in 1000 days. The Union Cabinet recently approved a public private-partnership model for the rollout of BharatNet project for broadband services in villages in 16 States with a viability gap funding of `19,041 crore. The Telecom Ministry has also floated a global tender to speed up the entire process.

To make this a success, the government should provide free right-of-way for laying the cable. Wherever possible, separate dedicated corridors should be earmarked for BharatNet. Once all the villages are connected with a robust broadband network, it would add to India’s GDP and make the villages prosperous. 

And to make this happen, domestic companies need to produce optical fibre cables and the related telecom equipment to decrease dependency on imports. The core transmission network also needs to be upgraded.

One area of concern is the Chinese dominance in the Indian telecom market. Chinese telecom equipment manufacturers today rule the global market. In India too we see the Chinese dominance not just in the equipment market but also in the mobile handsets market. All this has happened in less than a decade because Chinese products are cheaper than European products.

Recently the Indian government has defined policy changes to restrict Chinese firms from participating in government tenders. These restrictions need to be extended to other foreign players too to safeguard the interests of the domestic industry.

India must follow an inclusive and strategic approach to protect its telecom ecosystem, without compromising on the growth of markets, or the enthusiasm for flagship schemes that can give impetus to private investments.  To this end, India can do well by obtaining technology transfers from friendly countries instead of going for research and development work.

(The writer is the Chairman of the Telecom Equipment and Services Export Promotion Council (TEPC). The views expressed are personal.)