Besides Cisco’s Pune manufacturing base, Ericsson and Nokia are very much interested in expanding their existing production facility in India taking advantage of the Rs 12,195 crore production linked incentive (PLI) scheme.
Networking solutions giant Cisco has already restarted its production facility in Pune and it is going ahead with its plan to support the Made In India campaign.
Cisco, Ericson and Nokia are keen to expand their existing operation in India for the global supply chain. The decision comes close on the heels of vendors like Samsung, Ciena, and Engineering Manufacturing Services (EMS) companies like Jabil, Foxconn, Sanmina and Flex have evinced keen interest.
These companies want to set up manufacturing in India for telecom and networking products for domestic as well as export markets under the newly announced PLI scheme, the government said in an official release.
Indian manufacturers like VVDN Technologies, Dixon, HFCL, Coral Telecom and Sterlite Technologies have also shown interest in the scheme.
The Department of Telecommunications (DoT) was expected to release final guidelines for the scheme by March 31 and operationalise them by April 1. However, the DoT is expecting more applications and has therefore extended the time frame, said, industry executives.
At present, US-based Cisco’s largest research and development (R&D) facility outside the US is in India. But, it does not have any big manufacturing facility in the country. The company is worth in excess of $42 billion.
Cisco’s current facility at Pune is being used to produce and ship orders for customers in the country as well as for testing, development, logistics and in-house repair capabilities. The product portfolio will include routers, switches and various circuit boards, etc.
In a related development, Dixon Technologies (India) Ltd and Bharti Enterprises Ltd signed a pact to form a joint venture (JV) to manufacture telecom and networking products such as modems, routers, set-top boxes and Internet of Things (IoT) devices. The JV will file necessary applications with the communications ministry to avail benefits under the PLI scheme.
The PLI scheme in telecom and networking products aims to make India a global hub of manufacturing.
Besides telecom equipment, including core transmission equipment, 4G/5G next-generation Radio Access Network and wireless equipment, the PLI scheme in telecom and networking products aims to make India a global hub of manufacturing in access and Customer Premises Equipment (CPE), Internet of Things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers amongst others.
It is estimated that full utilisation of the scheme funds is likely to lead to incremental production of around Rs 2.4 lakh crore with exports of around Rs 2 lakh crore over five years. The scheme is expected to bring in investment of around Rs 3,000 crore and generate huge direct and indirect employment.
The scheme is getting an overwhelming response as various global companies are relocating their supply chain and manufacturing base from China as part of long term strategy. Besides India, other APAC countries like Vietnam, Thailand and Malaysia are attracting the majority of investments in this area.
Along with the various state governments, the central government is going ahead with an extensive outreach programme with the support of the Invest India team for the PLI scheme. These strategies are paving the way for one to one meeting with potential investors, participation in global outreach events organised by industry associations and webinars among others.
Under the scheme, the investor will be incentivised for incremental sales up to 20 times the committed investment enabling them to reach global scales and utilise their unused capacity and ramp up production.
The core component of the scheme is to offset the huge import of telecom equipment worth over Rs 50,000 crore and reinforce it with ‘Made in India’ products both for domestic markets and exports.
The target is to make India a preferred global manufacturing destination for telecom products as also a net exporter of telecom and networking products.
The scheme is investment-linked which will enable the vendors to invest in backward integration thereby increasing the value-added in the country. The government said that global vendors will bring in their component suppliers and develop ancillaries.