Manoj Bhan, EVP, Corporate Affairs and Communications, Vihaan Networks Limited

Promoting domestic manufacturing to become self-reliant is one of the most important strategies for im­p­ro­ving the economic growth of a country. This is what the Government of India is aiming at, and visionary schemes such as the Make in India mission and the Atm­a­nirbhar Bharat Abhiyan are prime examples that are working towards the big ch­ange that the country expects.

Policy support by the government

The government announced Make in India in 2014, and the Department for Promo­tion of Industry and Internal Trade notified it through a Public Procurement (Pre­ference to Make in India) Order (PPP-MII Order) in June 2017. In line with this order, the Department of Telecomm­unications (DoT) notified a list of 36 products with sufficient local capacity and competition, duly prescribing the local content and percentage of Preference to Make in India in each product category.

Further, to shore up domestic manufacturing, the government announced a production-linked incentive (PLI) sche­me, which is a cornerstone of the government’s push to accomplish the vision of At­maanirbhar Bharat. DoT also ann­ou­nced a design-led PLI scheme for telecom and networking products, which provides an additional incentive of 1 per cent over and above the existing incentives for products that are designed and ma­nufactured in India.

Supporting BSNL

In July 2022, the government approved a revival package for Bharat Sanchar Ni­g­am Limited (BSNL) amounting to Rs 1.64 trillion. The fund is mainly focused on infusing fresh capital for upgrading BSNL services, allocating spectrum, de-stressing its balance sheet and augmenting its fibre network by merging it with Bharat Broadband Nigam Limited.

The revival of BSNL is, in a way, beneficial for the domestic design-led industry, as BSNL is the only operator in India that fully complies with the government’s PPP-MII Order commitments, in all its procurements.

Resolving barriers to the PLI scheme

The PLI beneficiary companies will be eligible for incentives, provided they meet both the cumulative investment and net incremental sales criteria for each year during the scheme period. However, meeting the net incremental sales depen­ds purely on market opportunities.

To help companies meet the net incremental sales required to successfully receive PLI, the government must reser­ve some portion of the network roll-out, with respect to both the expansion of existing networks and extending coverage to unconnected villages, and the upgradation of networks, for PLI beneficiaries who successfully complete the proof-of-concept testing and register with BSNL as original equipment manufacturers for those products.

Out of the total 42 PLI beneficiaries, there are a few companies in India that design and develop networking equipment based on in-depth research and development (R&D). Private sector companies that use R&D to design and develop technologies such as long term evolution (LTE), LTE-Advanced, and 5G and above are strong pillars of the nation.

Market scenario vis-à-vis growth potential

According to India’s export-import data for financial year 2021-22, the total export of telecom products stood at Rs 611.77 billion, out of which Rs 356.95 billion or over 58 per cent was accounted for by the export of mobile phones. However, the case of telecom network equipment paints a different picture, where total export stood at Rs 4.28 billion, accounting for a mere 1 per cent of the overall export. This is a matter of concern, as it is directly related to India’s technological growth in the telecom equipment segment.

India has the second-largest mobile subscriber base of 1,175 million subscri­bers, and an overall teledensity of 84.69 per cent. The teledensity in the largely untapped rural market stands at 58.01 per cent compared to 134.08 per cent  in urban areas.

The expansion of network coverage and upgradation of existing sites where older technologies exist, provide opportunities for network technology companies to present their homegrown soluti­ons for these regions.

Summing it up

According to the “Indian Telecom Services Performance Indicator Report” for the April-June quarter of 2022, released in November 2022, the market share of private operators stands at 89.38 per cent while that of public sector operators is me­rely 10.62 per cent. Private operators generally do not come under the purview of the government’s PPP-MII Order, unless the network roll-out is carried out under government funding sche­mes such as the Universal Service Oblig­a­tion Fund. This translates into a loss of opportunity for manufacturing companies in India, which has been the root cause of the domestic manufacturing industry’s sufferings. While policy support cannot be ignored, correctly implementing it in the right spirit is also of prime importance.