The production-linked incentive (PLI) scheme for the telecom sector has failed to push local value addition, with top networking products for 4G and 5G services, which account for 80% of the subsidies claimed so far, having just 5% average domestic content, people aware of the details told ET.
This is in sharp contrast to the smartphone PLI scheme, where the local value addition is in the range of 19-20%, despite starting around the same time as the scheme for telecom and networking products that was launched in April 2021.
Officials aware of the matter said the weak numbers around domestic value addition in networking products has forced the Department of Telecommunications (DoT) to take policy measures to increase local content, both in electronics and non-electronics, as telecom equipment is critical infrastructure where India has ambitions to become self-reliant.
Global firms like Nokia and Ericsson have provided made-in-India radios under the PLI scheme for the 5G rollout in the country. But increasing domestic value addition remains a challenge, noted officials.
The department believes manufacturers making the products in India and sourcing components and chips from China and elsewhere are reluctant to invest in localisation in the absence of domestic buyers like telcos and internet service providers. This is because the buyers can buy the same products at lower prices from China and other countries, pointed out experts.
DoT has been engaging with India’s telcos as well as equipment manufacturers to increase the sourcing of local content. “The government has been working on three directions to boost local value addition — support to domestic makers, support to local chip design firms and mandate or incentivise telcos to buy from local firms,” said an official privy to the details.
Another official said all stakeholders should work together to increase the local content in products. “The component PLI scheme by the electronics ministry will help create an ecosystem in the country that will benefit the telecom sector also,” the official said.
Asked about increasing the value addition in products that are manufactured locally, Andres Vicente, head of Southeast Asia, Oceania and India at Ericsson, recently told ET that the company remained committed to keep increasing its investments here. "We have to be conscious that not all components are available in India yet, so we need to plan for a transition, and those components need to be competitive,” he said.
As many as 42 firms, including 28 MSMEs, are part of the Rs 12,195 crore five-year PLI scheme for telecom and networking products. However, only half of the companies have claimed incentives for meeting the targets.
As per DoT, by July this year, companies had achieved sales of Rs 91,125 crore under the PLI scheme, of which Rs 17,809 crore came from exports.
This is in sharp contrast to the smartphone PLI scheme, where the local value addition is in the range of 19-20%, despite starting around the same time as the scheme for telecom and networking products that was launched in April 2021.
Officials aware of the matter said the weak numbers around domestic value addition in networking products has forced the Department of Telecommunications (DoT) to take policy measures to increase local content, both in electronics and non-electronics, as telecom equipment is critical infrastructure where India has ambitions to become self-reliant.
Global firms like Nokia and Ericsson have provided made-in-India radios under the PLI scheme for the 5G rollout in the country. But increasing domestic value addition remains a challenge, noted officials.
The department believes manufacturers making the products in India and sourcing components and chips from China and elsewhere are reluctant to invest in localisation in the absence of domestic buyers like telcos and internet service providers. This is because the buyers can buy the same products at lower prices from China and other countries, pointed out experts.
DoT has been engaging with India’s telcos as well as equipment manufacturers to increase the sourcing of local content. “The government has been working on three directions to boost local value addition — support to domestic makers, support to local chip design firms and mandate or incentivise telcos to buy from local firms,” said an official privy to the details.
Another official said all stakeholders should work together to increase the local content in products. “The component PLI scheme by the electronics ministry will help create an ecosystem in the country that will benefit the telecom sector also,” the official said.
Asked about increasing the value addition in products that are manufactured locally, Andres Vicente, head of Southeast Asia, Oceania and India at Ericsson, recently told ET that the company remained committed to keep increasing its investments here. "We have to be conscious that not all components are available in India yet, so we need to plan for a transition, and those components need to be competitive,” he said.
As many as 42 firms, including 28 MSMEs, are part of the Rs 12,195 crore five-year PLI scheme for telecom and networking products. However, only half of the companies have claimed incentives for meeting the targets.
As per DoT, by July this year, companies had achieved sales of Rs 91,125 crore under the PLI scheme, of which Rs 17,809 crore came from exports.
