According to Crisil, the implementation of the production-linked incentive (PLI) scheme, along with enhanced technical support led by the adoption of open radio access network (RAN) and investments in 5G telephony, is expected to signal a course correction for Indian telecom companies, which have been heavily import-dependent and reliant on global vendors for network roll-outs.
Imports have accounted for 75 to 85 per cent of the overall telecom equipment market, Crisil said. While certain global vendors have production facilities in India, the majority of equipment is sourced from east Asian nations such as China, Malaysia, South Korea, and Vietnam.
The Crisil report noted that the government is extending the PLI scheme to the telecom equipment sector to boost domestic manufacturing and attract investment in the target segments of telecom and networking products.
10 MSMEs and 10 non-MSMEs (of which at least three are domestic companies) will be shortlisted based on their investment commitment. Shortlisted companies will receive incentives based on incremental sales over fiscal 2020, the base year.
According to Crisil, domestic gear manufacturers can tap into a market opportunity of Rs 500 billion that is expected to double by fiscal 2025, as PLI covers major telecom equipment except for optical fibre.
Moreover, the PLI scheme has been well-timed to coincide with the launch of 5G, providing a much-needed policy boost to domestic telecom manufacturing. Telecom imports would be reduced to under 50 per cent (from 75 to 85 per cent).