European telecom vendors Ericsson and Nokia have expressed their intention to expand existing manufacturing operations in India to support their global supply chain, the Indian government said in an official statement.
Samsung, Cisco and Ciena have also told India’s Department of Telecommunications (DoT) that they want to set up their manufacturing operations in the country, leveraging the newly launched production linked incentive (PLI) scheme for telecom and networking products to serve domestic and international demand.
“…Engineering Manufacturing Services (EMS) companies like Jabil USA, Foxconn Taiwan, Sanmina and Flex have shown interest to set up manufacturing in India for Telecom & Networking Products for domestic as well as export markets,” the government said.
Domestic telecom gear makers VVDN Technologies, Dixon, HFCL, Coral Telecom and Sterlite Technologies have also shown interest in the PLI scheme.
Dixon has already said that it is forming a joint venture with Bharti Enterprises to manufacture networking products, IoT devices and set-top-boxes locally leveraging the PLI scheme.
India had recently revealed that the scheme would have an outlay of Rs 12,195 crore ($1.67 billion), and over five years, will lead to production of Rs 2.4 lakh crores ($32.88 billion) and exports of about Rs 2 lakh crore ($27.4 billion). In February, the country’s telecom minister, Ravi Shankar Prasad, said that the ‘Make in India‘ scheme would bring investment of more than Rs 3,000 crore ($411 million) besides generating huge direct and indirect employment and taxes.
The PLI scheme will cover core and transmission gear, 4G/5G next-generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers etc.
The Department of Telecommunications (DoT) will soon announce the final guidelines for vendors. The scheme will require approved companies to make a minimum investment of Rs 100 crore ($13.7 million) over the next few years. For MSMEs, the minimum investment threshold has been kept at Rs 10 crore ($1.37 million), and they will get a 1% higher incentive proposed every year for the first three years.
“The investor will be incentivized for incremental sales up to 20 times the committed investment enabling them to reach global scales and utilize their unused capacity and ramp up production,” India said in a statement.
This scheme’s core component is to offset the huge import of telecom equipment worth over Rs 50,000 crores or $6.85 million, “and reinforce it with “Made in India” products both for domestic markets and exports. The target is to make India a preferred global manufacturing destination for telecom products and making India a net exporter of telecom and networking products.”
India said that the scheme is investment-linked, enabling the vendors to invest in backward integration, thereby increasing the value addition in the country. “Global vendors will bring in their component suppliers and develop ancillaries,” it said.
India said that it would run an extensive outreach program with the support of the “Invest India team” for the PLI scheme.
BSNL logjam resolved
Global telecom vendors like Nokia, Ericsson and Samsung will also be targeting BSNL’s big-ticket 4G expansion contract after the Indian government dropped a key tender clause, which was limiting their participation.
According to reports, these vendors are no longer required to submit source code for core and radio networks if they participate in the BSNL’s nationwide 4G tender.
After approvals from DoT and the empowered technology group (ETG), the BSNL 4G tender will now be divided into two parts for multinational and homegrown vendors, respectively.
Nokia, Ericsson and Samsung can now participate in “Part A” of the tender for radio networks.