MC EXCLUSIVE Global telecom gear makers in talks with govt to bring in suppliers to boost local value addition

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Global telecom gear makers are stepping up engagement with the government to bring more of their global suppliers to India to deepen local value addition and strengthen the country’s telecom manufacturing ecosystem.

These companies are in discussions with the department of telecommunications (DoT), which is working on policy measures to boost local content — across both electronic and non-electronic components — as part of India’s push to build a self-reliant telecom equipment supply chain.

The talks come at a time when the industry expects local value addition in telecom gear to rise by about 7 percent under the new Electronics Component Manufacturing Scheme (ECMS 2.0), which has approved projects for multi-layer printed circuit board (PCB) and raw material production, sources said.

On October 28, the government approved seven ECMS projects, involving investments worth Rs 5,532 crore and a production target of Rs 44,406 crore.

While the government is yet to share the contours of its plans or policy interventions, consultations are on with multinational and domestic telecom equipment makers (OEMs) as well as contract manufacturers (EMS players).

The PLI scheme has encouraged global players such as Nokia, Samsung, Ericsson, Cisco, and Commscope to set up local production lines directly or through EMS partners. It is, however, yet led to a substantial increase in local value addition, which remains at around 5 percent. It is far lower than the 19–20 percent achieved through the smartphone PLI scheme, which began around the same time in April 2021, experts said.

“We have a common direction (with the government) to increase the value added in India and are seeking support to bring together an ecosystem of suppliers so that more components can be made locally,” Andrés Vicente, Head of Southeast Asia, Oceania, and India at Ericsson, told Moneycontrol in an interaction.

Ericsson recently began manufacturing passive antennas in India through a partnership with VVDN Technologies, making the country one of only four global export hubs for such equipment  alongside China, Romania, and Mexico. It also gets its other radio products through Jabil in India. Both Jabil and VVDN are approved under the PLI scheme for telecom.

“We’ve agreed to actively support this effort by encouraging our global suppliers to set up operations in India, and that process is already underway. We’re asking our global partners to come with us, and that process is already underway,” Vicente said. “We need a holistic plan that covers the entire value chain — not just final assembly — to make India a true alternative for global telecom manufacturing.”

Similarly, Netherlands-based GX Group is collaborating with the government and industry bodies to attract global suppliers and strengthen the domestic manufacturing ecosystem.

“We’re pushing hard to localise as much as possible. It’s aligned with the Atmanirbhar Bharat strategy and essential from a supply-chain perspective. Global uncertainties, fluctuating prices, and currency issues make local manufacturing critical,” said Paritosh Prajapati, CEO and co-founder of GX Group.

GX Group is also represented on the board of the Telecom Equipment and Services Export Promotion Council (TEPC), where it is working to bring more global suppliers into India. “Localising the ecosystem benefits both us and the broader industry,” he said.

According to Prajapati, GX Group has already achieved all five years of its PLI manufacturing targets and received reimbursements for three years. The company has urged the government to extend the telecom PLI scheme by another five years.

“To sustain this growth, an additional five-year extension would help companies continue scaling organically and investing confidently,” he said.

Finnish telecom gear maker Nokia has also indicated that it is ready to increase local value addition as India develops a stronger component ecosystem.

“If India builds an electronics component ecosystem like the one that developed in the auto industry, it will be a huge positive. We are ready to source locally as that capacity emerges,” Tarun Chhabra, India Head, Nokia, told Moneycontrol.

Nokia’s Chennai factory, operational for more than 15 years, serves as both a key domestic production base and an export hub. It has also begun local manufacturing of Fixed Wireless Access (FWA) devices in collaboration with Dixon Technologies.

“We have been manufacturing radios in India for 15–16 years. Depending on demand, our exports vary between 45 percent and 65 percent of the production,” he said.

Telecom equipment is classified as critical infrastructure, and the government’s broader goal is to reduce import dependence by fostering domestic production of components and subsystems.

Forty-two companies, including 28 MSMEs, have joined the government’s Rs 12,195 crore, five-year PLI scheme for telecom and networking products. Only about half of them have claimed incentives after meeting the prescribed targets.

As of July this year, firms had achieved sales worth Rs 91,125 crore under the scheme, with Rs 17,809 crore coming from exports, according to DoT data.

India continues to import several key components, such as PCBs, filters, batteries, and enclosures, which limit its competitiveness compared to other manufacturing bases.

Sources aware of the government’s plan said that if DoT wants to think outside the box, it would need to consider removing the IPR clause for multinational OEMs to promote greater value addition and ensure long-term sustainability.

“If large gear makers were treated as OEMs even when they manufacture through EMS partners — and if the IPR clause were relaxed — this could truly move the needle. This would also help domestic companies developing indigenous technology,” a person said on condition of anonymity.

“Given the large presence in manufacturing, R&D, and GCCs of multinational telecom companies, the government could consider upgrading certain vendors to Class 1 or Class 2 categories. To enable this, some tweaks to the IPR mandate would be necessary.”

Experts believe the electronics component PLI scheme being implemented by the Ministry of Electronics and IT could help bridge this gap by creating a stronger local component base that benefits telecom manufacturers as well.

“Some local value addition will take place through the ECMS 2.0 scheme. Multi-layer PCBs are required in telecom gear, contributing around 5–7 percent of the component value toward the final product. Since there is also dependency on raw materials, players like Kaynes have received approval to manufacture both PCBs and raw materials in India. In total, around 7 percent value addition will come from ECMS 2.0,” an official said.

The projects approved in the first tranche of ECMS focus on manufacturing of PCBs, copper-clad laminates, camera modules, and polypropylene films.

Among the companies selected under the scheme, Kaynes Circuits leads the pack with four proposals covering PCBs, high-density interconnect (HDI) boards, camera modules, and laminates.

SRF will manufacture polypropylene film, a key material used in capacitors. Syrma Strategic Electronics and Ascent Circuits will produce multi-layer PCBs, whose usage spans industries such as consumer electronics, medical devices, automotive, and aerospace.