India must follow an inclusive and strategic approach to protect its telecom ecosystem, without compromising market growth
India is now on the cusp of another telecommunications revolution. On the one hand, we have 5G technology ready to transform the mobile world while, on the other hand, the ambitious BharatNet project can revolutionize the economy of rural India with robust broadband infrastructure.
India is now the second largest mobile phone market in the world. We are also the second largest market in terms of broadband users. Our teledensity in rural areas has passed the 60% mark. India is one of the biggest consumers of data in the world. We are rapidly moving towards a total digital economy. These facts illustrate the magnificent course of the Indian telecommunications market over the past two decades.
The government has once again focused on the telecommunications market. The latest buzz is the introduction of the Production Linked Incentive (PLI) program for the telecommunications sector which the Union Cabinet recently approved with a budget expenditure of 12,195 crore to promote the manufacture of telecommunications products. and networking in India.
Thanks to this policy, India will move towards self-sufficiency in the manufacture of telecommunications. By encouraging large-scale manufacturing in India, the domestic added value will gradually increase. Giving a higher incentive to MSMEs will encourage domestic telecom manufacturers to become part of the global supply chain.
However, the industry believes that the government should guarantee the reservation of the purchase of “Made In India” products for domestic consumption, in addition to granting an extension of tax benefits to telecommunications industries covered by the PLI regime. What is also necessary is the inclusion of specialized service sectors such as the laying and maintenance of submarine cables within the framework of the PLI. All of this will make India self-sufficient in the manufacture of telecommunications equipment.
The establishment of the semiconductor industry, which is the backbone of the microelectronics industry, is an area of concern that the government has failed to respond to over the years. There are several huge gaps that need to be filled to ensure India’s smooth entry into the big manufacturing league, which is now controlled by Western countries and China.
In the past, the government has taken half-hearted initiatives for chip manufacturing. A semiconductor lab was set up a long time ago, but it could not meet the demand and demands of Indian industry due to lack of proper vision and planning. To trace the history of success in chip manufacturing, the government must set up at least a few industries in India directly or under the PPP model with the assurance that the manufactured goods must be consumed in India itself.
An important aspect of the telecommunications revolution is the rapid growth of rural telephony with particular emphasis on rural broadband. Under BharatNet, Prime Minister Narendra Modi has set himself an ambitious goal of delivering fiber to six Lakh villages in 1,000 days. The Union Cabinet recently approved a public-private partnership model for the deployment of the BharatNet project for broadband services to villages in 16 states with sustainability gap funding of 19,041 crore. The Ministry of Telecoms has also launched a global call for tenders to speed up the entire process.
For this to be successful, the government would have to provide a free right of way for the laying of the cable. Where possible, separate dedicated lanes should be reserved for BharatNet. Once all the villages are connected to a robust broadband network, it will increase India’s GDP and make the villages prosperous.
And to achieve this, domestic companies must produce fiber optic cables and associated telecommunications equipment to reduce dependence on imports. The central transport network also needs to be modernized.
One of the areas of concern is Chinese dominance in the Indian telecommunications market. Chinese telecommunications equipment manufacturers now dominate the world market. In India too, we see Chinese dominance not only in the equipment market but also in the mobile phone market. All of this happened in less than a decade because Chinese products are cheaper than European products.
Recently, the Indian government set out policy changes to prevent Chinese companies from participating in government tenders. These restrictions must also be extended to other foreign players to safeguard the interests of the domestic industry.
India must follow an inclusive and strategic approach to protect its telecom ecosystem, without compromising the growth of markets, nor the craze for flagship projects that can boost private investment. To this end, India can do well by securing technology transfers from friendly countries instead of engaging in research and development.
(The author is the Chairman of the Telecom Equipment and Services Export Promotion Council (TEPC). The opinions expressed are personal.)