Bengaluru, NFAPost: The panel discussion organised as part of e-Summit on ‘Atmanirbhar Bharat: India’s Challenge in Telecom Manufacturing and Export’ organised by the Digital User Group (DUG) came up with the conclusion that the Production Linked Incentive Scheme (PLI scheme) of the government is not conducive for the telecom sector.
The Ministry of Electronics and Information Technology (MeitY) came up with PLI scheme and notified on April 01 for supporting electronics manufacturing in the country.
The panel felt that the Telecom sector requires a Design Led PLI Scheme and needs to reward a higher value addition and design led operations in India. Also, the Line of Credit for foreign aid should be reserved for only Domestic manufacturers and not importers.
This event, led by DUG President Anil Prakash, attended by over 100 senior policymakers, industry captains and researchers. It was DUG’s second such event in 3 months.
The intensive panel discussion was moderated by former IESA President and CEO of VANN Consulting PVG Menon and had the participation of Tejas Networks CEO Sanjay Nayak, Saankhya Labs CEO Parag Naik, ITI Ltd Advisor-R&D Arun Kuma M, CDOT former Executive Director Vipin Tyagi and Ericsson India Vice President Subrata Mitra.
The panel discussion revolved largely around the four key topics of importance of telecom manufacturing in India, design and R&D for telecom equipment, manufacturing competitiveness and exports.
The members of the panel were unanimous in their opinion that the telecom equipment makers don’t want grants for research and development (R&D). But at the same time, they are looking at assured business. There was a demand for advances against orders, and the reiteration of technical capability in India to build world-class products from India, for the world.
There was a suggestion that to promote adoption and deployment of indigenously developed telecom products, the buyers should be given credit for buying these products. The credit could be in the form of either IT rebates or rebates against future AGR dues. This was due to the progressive phasing out of the Sec-35 (2AB) Income Tax relief which was earlier available to domestic R&D houses.
Commenting on the current geopolitical situation, the panellist came up with the fact that the Telecom infrastructure and Telecom Equipment played a very vital role in national security.
“It was emphasised that our reliance on imported products makes our entire security network weaker. Apart from a national perspective, manufacturing Telecom Equipment in India also made a huge economic sense as this will lead to growth in employment and reducing our forex,” said a panel member.
Tejas Networks CEO Sanjay Nayak said that Covid has thrown up business opportunities and India is rightly placed to take advantage of this opportunities.
“India has four critical aspects going in its favour – the Atmanirbhar Bharat programme, the Growth of Telecom and IT requirements post-Covid, Anti-China sentiment worldwide and our large talent pool in India. This was the right moment for us to address this opportunity,” said Tejas Networks CEO Sanjay Nayak.
He stressed that the cost of not doing something now was very high for India. Tejas Networks CEO Sanjay Nayak outlined that the Govt of India needs to take the initiative to fund the domestic R&D for Telecom as it is a strategic sector.
“This could be done by giving capable Indian firms a decent sum of investment as an advance against future orders. This could be bound with tight contracts and timelines of a 12 month period,” said Tejas Networks CEO Sanjay Nayak.
Ericsson India Vice President Subrata Mitra highlighted that Ericsson was one of the oldest foreign telecom equipment manufacturers in India.
“Telecom manufacturers in India have to deal with zero duty imports from FTA countries and face the bureaucratic processes involved in India. Ericsson has started the development of a component ecosystem in India and has got some of their International component suppliers to invest in India as well,” said Ericsson India Vice President Subrata Mitra.
Saankhya Labs CEO Parag Naik outlined the various challenges involved in conducting R&D in India, especially long gestation R&D like semiconductors.
“It is also very difficult to raise money for R&D in India as investors wanted to see quick returns. The R&D activities required capacity to withstand high levels of failure which most Indian firms lack,” said Saankhya Labs CEO Parag Naik.
ITI Ltd Advisor-R&D Arun Kuma M set out the activities undertaken by ITI in the past and how they had worked collaboratively with CDOT and other international players and made products in India.
“ITI is looking for new technology joint ventures and would be willing to undertake to manufacture in India for new products as well,” said ITI Ltd Advisor-R&D Arun Kuma M.
The panel was of the opinion that the PLI scheme of MEITY was not conducive for the Telecom sector. They felt that the Telecom sector requires a Design Led PLI Scheme and needs to reward a higher value addition and design led operations in India. Also, the Line of Credit for foreign aid should be reserved for only Domestic manufacturers and not importers.
The discussion also witnessed strong view from the panellist that the Government of India needs to push private telecom players to use domestically manufactured products and this could be done by encouraging them with a financial incentive scheme which could be a reduction in AGR dues or credit system for buyers.
In terms of manufacturing competitiveness, the government must attempt to start localising the electromechanical products in India at the earliest. They admitted the fact the semiconductors may take more time.
For exports promotion, the panel felt that Industrial policy needs to be linked with foreign policy and Indian exports need to play a larger role where India has good brand equity in various countries.
DUG President Anil Prakash said that the DUG is setting up a high-level Telecom Manufacturing and Export Interest Group to carry forward the discussion and implementation of the recommendations and will be coming out with a webinar report and study report by the Feedback Advisory.
“Indian telecom industry is on a cusp of change and they are witnessing dynamic technology shifts. Here we should have a concrete action plan looking at national interest and job creation as the primary motive,” said DUG President Anil Prakash to NFAPost.
Besides Chief Guest DIPP Secretary Ramesh Abhishek, the event had other keynote speakers including World Bank (Washington DC) Senior Regulatory Specialist Rajendra Singh, Former C-DOT Executive Director Vipin Tyagi, SITARA Founder & Chairperson Smita Purushottam, NITI Aayog Digital Communications Joint Secretary Dr. Archana Gulati and CMAI President and TEMA Chairman Emeritus Prof.
He said the fact that more than 90% Telecom Equipment in India was imported, and said that the Government was very concerned about this. In 2017, the Govt of India came out with a Make in India criteria for all equipment bought by govt. Telecom Service Providers. He emphasized the need for a Phased Manufacturing Program (PMP) for Telecom Equipment. He acknowledged that the sector needs urgent fiscal incentives for it to make domestic manufacturing happen in a large way. He stressed that the present govt. was open to new ideas and urged industry to make pointed suggestions for policy change.
He came up with the suggestion that an “innovative approach was needed for the 5G Spectrum Management”. He felt that the ‘Data World would be dominated by a handful of countries and India was very well poised to take a lead here and cater to the needs of other developing countries’.
He spoke from his own experience of having led R&D in the Telecom Equipment space. He said that India had already proven that it could do R&D in Telecom, develop new products, and compete against the best in the world. He lamented India’s low investment on R&D, and pushed for increasing it.
Dr. Archana Gulati
She opined that the COVID pandemic had shown all of us how important a good Telecom Infrastructure was for the nation as we increasingly depended on Digital solutions for most of our needs. She stressed the need to develop domestic supply chains and reduce dependence on imports. She said that Govt. of India was bringing out a PLI Scheme for Telecom Equipment, as it does not wish to see India only as a large market but also be a big manufacturer of Telecom Products.
Ambassador Smita Purushottam
He spoke about how different countries had come up with various market developmental models, which protected their own domestic industry. She was critical of India signing treaties such as the ITA-1 and various Free Trade Agreements (FTA) as they had hurt the Indian Telecom industry. She was called for an overhaul of govt. procedures for procurement and for a bias for buying Indian equipment. She outlined Sitara’s efforts to bring these issues to the India’s highest levels of the govt. She also called for creating a DARPA/ISRO-type organization to deploy indigenous 5G capability in mission-mode.
Prof N K Goyal
He bought out the need to integrate electronics manufacturing with the Defence Sector as most developed countries had done. He made some specific recommendations on that the ‘Make in India’ initiative should be given prominence to our Telecom Service Providers as well. He also pushed for supporting BSNL for providing rural connectivity. He also called for the creation of a Telecom Finance Corporation as per TRAI recommendations.