Government Plans New PLI Scheme for Telecom Components

The Indian government is developing a production-linked incentive (PLI) scheme to accelerate the localisation of non-electronic components used in the manufacturing of key telecom products. According to sources, the initiative aims to strengthen domestic production capabilities and reduce dependency on imports.

Proposed Models for Localisation Targets

Discussions with stakeholders have presented two models for linking incentives to a localisation roadmap. The first model proposes a phased localisation of the non-electronic bill of materials (BOM), starting at 30% in the second year, 50% in the third year, 70% in the fourth year, and reaching 90% by the fifth year.

The second model outlines yearly lists of specific components to be localised and procured exclusively from Indian suppliers within a two- to five-year timeframe. Industry feedback, however, indicates a preference for the BOM percentage-based model.

Focus on Five Key Telecom Products

The Department of Telecommunications (DoT) has identified five telecom products whose non-electronic components will be targeted under the proposed scheme. These include:

• 4G/5G Radio Access Networks (RAN): Radios and baseband units.
• Switches: Critical for network connectivity.
• GPON ONT (Gigabit Passive Optical Network Optical Network Terminals): Convert optical signals into electrical signals for end-user devices.
• WiFi Access Points: Essential for wireless internet connectivity.
• Customer Premises Equipment (CPEs): Such as internet set-top boxes.

For 4G/5G RAN radios, the government has already proposed specific localisation targets, such as plastic and rubber parts by the second year, metal parts by the third year, antennas by the fourth year, and RF filters, connectors, and cables by the fifth year.

Challenges and Existing Localisation Levels

Despite an ongoing PLI scheme for telecom products, with a budget of ₹12,195 crore and 42 eligible firms, localisation levels remain low. Current levels range from just 3% of the BOM for switches, 4% for 4G/5G RAN and internet set-top boxes, to 12% for GPON ONT. These figures highlight the need for targeted efforts to boost domestic manufacturing of components.

So far, companies under the existing telecom PLI scheme have collectively invested over ₹3,718 crore. However, the challenges of scaling localisation in non-electronic components have prompted the need for a more focused approach.

Also read: India’s Maritime Sector Goes Digital with C-DAC

Integration with Electronic Component Incentives

The proposed scheme bears similarities to a forthcoming PLI scheme for electronic components, which is expected to be approved soon by the Cabinet. This scheme will have a budget of ₹25,000 crore for incentives. Telecom equipment manufacturers have also urged the Ministry of Electronics and Information Technology (MeitY) to include their requirements for electronic components under this initiative.

Finalization Underway