The telecom sector is evolving from a service-led growth model to a robust manufacturing ecosystem

The telecommunications sector in India has grown to become the world’s second-largest, contributing around 6.5 per cent to the nation’s GDP and emerging as a key economic growth engine. While we take pride in this impressive growth, there is something even more exciting - the rise of the telecom manufacturing ecosystem. India’s growth as a telecom equipment manufacturing destination can be attributed to the ‘Make-in-India’ and ‘Atmanirbhar Bharat’ initiatives launched by the Government in recent years.

The Production Linked Incentives (PLI), launched in 2020, and its subsequent amendments in 2022 to facilitate design-led manufacturing at an additional incentive rate with an allocated sum of Rs 4,000 crores also provided a major boost to telecom manufacturing in India.

As per the latest update by the Ministry of Communications, sales of telecom equipment have surpassed the Rs 50,000 crore milestone under the PLI scheme, with exports at about Rs 10,500 crore. During this period, India exported mobile phones worth Rs 1.28 lakh crores and with 300 million units produced, it has emerged as the second-largest producer of mobile phones in the world.

On the telecom equipment front, India has become almost self-reliant in antennae, Gigabit Passive Optical Network (GPON) and Customer Premises Equipment (CPE). As a result, India’s status has turned from importing telecom equipment worth Rs 74,116.21 crore in FY 13-14 to exporting equipment worth over Rs 1.49 lakh crore in FY 23-24.

Though we are still importing certain products, the gap between imports and exports has gone down significantly. Apart from fostering self-reliance, indigenous manufacturing of telecom equipment also addresses the national security concerns associated with telecom imports.

Manufacturing has emerged as an important aspect of the telecom sector’s contribution to the GDP through the creation of substantial employment opportunities across the value chain, from manufacturing to research and development.

So far, telecom manufacturing has created more than 17,800 direct jobs and several indirect jobs. The Indian telecom industry is likely to attract investments in the areas of core competency and cutting-edge technologies; ensure efficiencies and create economies of scale, in turn, enhancing exports and making India an integral part of the global value chain. Government’s Push for ‘Atmanirbhar’ Under the government’s ‘Atmanirbharta Abhiyan’, the Department of Telecom (DoT) aims to promote the ecosystem for research and development, transforming India into a global hub of technology development and telecom equipment manufacturing.

The Union Minister  Jyotiraditya Scindia recently announced the Government’s ambitions to set up telecommunication equipment manufacturing zones as the country expects more inflow of foreign direct investments (FDI).

Prime Minister Narendra Modi too emphasised the need for “Design in India, Design for the World”, calling for indigenous design capabilities and urging the citizens to create products that cater to both domestic and international markets. The Government has further established several task forces to ensure the smooth functioning of the telecom ecosystem.

These include initiatives for creating a component ecosystem, developing telecom chips from design to production, training skilled workers and designers, aggregating the demand for manufacturing from different departments and allocating them to eligible manufacturers, and optimising the use of test beds for product testing and certification. Following the Government’s decision to allow 100 per cent FDI in telecom, the sector has attracted USD 39 billion in FDI for manufacturing, further boosting the momentum and solidifying India’s role as a global telecom manufacturing hub. 

Thanks to these concerted efforts, India has been able to bring down the trade deficit in telecom from Rs 68,000 crores to Rs 4,000 crores, over the last five years.

Focus on design and creation of IP is crucial to fulfilling India’s ambitions as a product nation as design elements add substantial value to products. To build a strong ecosystem for 5G, DoT has sanctioned 17 companies under design-led manufacturing within the PLI scheme.

Further, global telecom equipment manufacturers like Cisco and Nokia have set up their manufacturing units in India, fostering world-class manufacturing prowess. These efforts, among others, emerge as a testament to the country’s indigenous engineering and entrepreneurial capabilities, as well as manufacturing prowess.

(The writer is Director General, COAI; views are personal)