In top gear: Telecom parts output crosses Rs 45,000-crore milestone

New Delhi: Telecom equipment manufacturing and exports is emerging as a new success story after smartphone exports.

Telecom equipment production for FY24 crossed the Rs 45,000 crore milestone with exports of around Rs 10,500 crore, backed by the Centre’s production linked incentive (PLI) scheme. The scheme has also led to creation of over 19,500 direct jobs, according to government data shared exclusively with ET.

“Telecom equipment manufacturing was a dream for our country and the Make-in-India and PLI programme have really succeeded,” telecom minister Ashwini Vaishnaw told ET.

He said India has been a telecom gear importer for decades which changed after the Make-in-India and PLI scheme, driving production of equipment worth more than Rs 45,000 crore in the country.

Telecom equipment comprises complex products such as radios, routers, network equipment, among others. Further, the government has allowed companies to claim benefits for making 5G fixed wireless access (FWA) equipment. Leading telcos Reliance Jio and Bharti Airtel are betting big on FWA to monetise 5G and all products are made locally.

As per government data, of the total Rs 45,988.54 crore worth of sales till February, global firms contributed Rs 36,537.68 crore with domestic firms accounting for Rs 6,768.74 crore and MSMEs at Rs 2682.12 crore. In terms of employment, domestic companies created 14,525 jobs, followed by MSMEs (2984 jobs) and global firms at 2041 jobs.

India-made telecom equipment is currently being exported to North America and Europe with top telecom companies globally as customers. “Lots of our Indian manufacturers are getting design inputs into the products. Products are designed in India, made in India and then exported, and the quality of products is good,” the minister said.

Department of Telecommunications (DoT) had notified the PLI scheme for telecom and networking products in February 2021 with an outlay of Rs 12,195 crore over five years. A total of 31 companies got approval on October 14, 2021, for the scheme, which offers incentives of 4% to 7% for different categories and years. For MSMEs, a 1% higher incentive is proposed in year 1, year 2 and year 3.

The scheme was amended in April 2022 to facilitate design-led manufacturing with an additional incentive rate of 1%, setting aside a sum of Rs 4,000 crore from the total allocation. The scheme was also extended by a year as most selected firms failed to achieve production targets due to Covid-related supply chain disruptions.

A total of 42 firms, including 28 MSMEs were selected under the revised scheme. These companies had committed to invest a total Rs 4,115 crore and were expected to generate additional sales of Rs 2.45 lakh crore and create additional employment of more than 44,000 over the scheme period.

Some of the prominent firms in telecom PLI scheme include Samsung, Dixon Technologies, HFCL, Jabil, Flextronics, Sanmina, Rising Star, Nokia, Tejas, etc. Nokia and Ericsson have utilised the majority of India-made radios for rolling out 5G networks of Reliance Jio and Bharti Airtel.

In FY23, over 20 companies met the targets, including Nokia, Jabil, Sanmina, HFCL, VVDN, Coral and Tejas Networks. However, in FY24, the number of firms meeting the targets would rise, said officials.

To boost equipment manufacturing, the Centre had tightened rules around custom duty payments by gear importers to plug leakages. This helped local manufacturing of routers, modems and set top boxes among others, said experts.