Post-PLI era: How Indian telecom OEMs are scaling beyond incentives?

Securing telecom gear to support 5G and eventually 6G, safer, reliable, and locally sourced, the supply chains are under transformation. India has started positioning itself more as a center of innovation for telecom rather than just a manufacturing base. 

A noteworthy catalyst to give thrust to such an evolution was provided by the PLI scheme that was initiated by the Department of Telecommunications in February 2021. As the scheme enters its sunset, OEMs in India are preparing now for the next phase- one that is characterized by design innovation, deeper localization, and going global.

Impact and milestones: How PLI changed, and changed Itself?
Under the PLI scheme for telecom and networking products, 42 companies have been approved by the government, including 28 MSMEs, hence emphasizing assistance to small to medium-sized manufacturers. 

Of these 42 beneficiaries, 17 have been in the category of design-led manufacturing, which actually attracts a further 1% in incentive from PLI for making products in India that are designed, developed, and manufactured therein. 

As of October 31, 2024, the Indian government disbursed a total of ₹331.86 crore in incentives under the Production Linked Incentive (PLI) Scheme for telecom and networking products. These incentives were allocated to 18 out of the 42 approved beneficiary companies. This information was provided by Minister of State for Communications, Dr. Pemmasani Chandra Sekhar, in a written reply to the Lok Sabha.

More than incentives: Building for long term
Such schemes, like PLI, are introduced with the said goal of sectoral growth being catapulted forward, and will remain temporary under ideal circumstances. However, it is within this scope that they offer true value: that is, engendering companies that can support the growth process themselves over time. 

Being one of the 18 companies under the scheme that has been disbursed, we can vouch for the highly transformative nature of the scheme. It motivated us to increase R&D investments, scale up manufacturing capabilities, hire new talent, and take calculated business risks that, without the government backing, would have been too formidable. 

Promoting local setup and innovation
While this scheme energizes the Indian assembly, the real evolution today is happening through higher value addition and design-led activity. Indian OEMs are now promoting sub-assembly, components, and full product design movement from system integrators to full-scale product innovators. 

Antennae, GPON, and CPEs, which were largely imported earlier, are now slowly and steadily making their way into homegrown production and development to ensure stabilized supply chains and solutions in the Indian context.

Time to shift emphasis on export-driven growth
With five years of support from the government, Indian telephone OEMs stand at the brink of scaling to compete independently. The next logical step for the government should be to actively promote export business from the telecom and networking industry. 

An export-linked incentive can well enable Indian OEMs to not only become self-reliant but also globally competitive. Telecom equipment exports from India already crossed $15.7 billion in 2023, against $9.8 billion in 2022. This explosive growth signals their readiness for global outreach, and this momentum needs to be sustained.

Hence, the post-PLI period presents both challenges and opportunities. The way forward for Indian telecom OEMs is harnessing gains from PLI, investment in D&R, and a strategy around export. With the right impetus through policy, strategic public-private partnership, and other focuses on innovation, India is poised to emerge as the global hub for telecom manufacturing.

-- -- Konark Trivedi, MD and Founder, Frog Cellsat Ltd.