PLI scheme for telecom to help develop disruptive tech

ANALYSIS
PLI scheme for telecom to help develop disruptive tech
A call center in operation in India. The country is poised to adopt disruptive technology in telecommunications by introducing PLI schemes in the sector.Courtesy: Getty Images

The Modi government has unveiled new measures to encourage the manufacture of cutting-edge equipment using disruptive technologies in order to make India self-reliant in critical areas such as communications and defence.

India took two major steps to become a development and manufacturing hub of disruptive technologies over the last one week, with the Department of Telecommunications announcing guidelines for the production linked incentive (PLI) scheme for telecom and networking equipment and the Ministry of Defence unveiling a positive list of 108 additional military platforms that will be developed and manufactured in India.

These are part of Prime Minister Narendra Modi’s Atma Nirbhar Bharat initiative to position India as a global manufacturing centre for a range of sophisticated items by attracting companies that are looking to diversify their supply chains away from China.

At present, almost 100 per cent of telecom networking equipment used in India is imported from countries like China, South Korea, Finland and Sweden. Incidentally, the Indian government has recently notified norms that effectively bar Chinese vendors like Huawei and ZTE from supplying equipment to Indian telecom operators.

The new PLI guidelines envisage providing incentives of $1.67 billion over a five-year period. Companies like Samsung, Nokia, Ericsson, Reliance and a host of others are expected to sign up for this scheme.

The fear is that these companies, which have significant links with the deep state in China, could create “backdoors” that will allow them to spy on Indian subscribers and even switch off the network in the event of hostilities between the two countries. These companies command a major share of the Indian telecom networking equipment market.

The PLI scheme in the telecom sector will run from the current fiscal to 2025-26, is expected to lead to direct investments of more than $400 million and generate thousands of direct and indirect jobs.
The PLI scheme in the telecom sector will run from the current fiscal to 2025-26, is expected to lead to direct investments of more than $400 million and generate thousands of direct and indirect jobs.Courtesy: Getty Images

India can be atma nirbhar in telecom sector

The new PLI guidelines envisage providing incentives of $1.67 billion over a five-year period. Companies like Samsung, Nokia, Ericsson, Reliance and a host of others are expected to sign up for this scheme.

In a first under the scheme, $133 million out of this amount has been set aside for micro, small and medium enterprises (MSMEs) to encourage the development of an indigenous supplier base for components that go into such equipment.

The development of this eco-system will ensure that the country becomes almost fully atma nirbhar (self-reliant) in this sector, a la, the automobile sector, which followed this route in the footsteps of Maruti Suzuki.

The scheme, which will run from the current fiscal to 2025-26, is expected to lead to direct investments of more than $400 million and generate thousands of direct and indirect jobs. “The full utilisation of the scheme funds is likely to lead to production of around Rs 2.4 lakh crore ($33 billion), with exports of Rs 2 lakh crore ($27.5 billion) over five years," a statement by the ministry of communication said. “Manufacturers with products using Indian technology are encouraged to apply,” it added.

A Tejas fighter aircraft from the IAF conducts manoeuvres. India can become the hub of manufacturing the latest defence platforms, the Defence Ministry has unveiled a list of 108 weapons systems that will, henceforth, have to be made in India.
A Tejas fighter aircraft from the IAF conducts manoeuvres. India can become the hub of manufacturing the latest defence platforms, the Defence Ministry has unveiled a list of 108 weapons systems that will, henceforth, have to be made in India.Courtesy: ANI

Domestic firms to develop disruptive defence technologies

In another decision that will lead to India becoming a hub of manufacturing the latest defence platforms, the Defence Ministry has unveiled a list of 108 weapons systems that will, henceforth, have to be made in India.

A ministry statement said the list “comprises complex systems, sensors, simulators, weapons and ammunitions like helicopters, next Generation corvettes, air borne early warning and control (AEW&C) systems, tank engines, medium power radar for mountains, MRSAM weapon systems and many more such items to fulfil the requirements of Indian Armed Forces”.

The full utilisation of the scheme funds will lead to production of $33 billion, with exports of $27.5 billion over five years. ‘Manufacturers with products using Indian technology are encouraged to apply,’ a government statement said.

India to buy indigenous air defence guns

Going step further, the Defence Ministry also approved the proposal to acquire air defence guns from domestic manufacturers. The Defence Acquisition Council (DAC) headed by Defence Minister Rajnath Singh approved the proposal that entails a cost of $750 million.

An Anti-Satellite (A-SAT) missile Mission Shakti' successfully tested by Defence Research and Development Organisation (DRDO). With renewed emphasis on Atmanirbhar Bharat, Indian companies are showing enthusiasm to get stuck into local manufacturing of weapons.
An Anti-Satellite (A-SAT) missile Mission Shakti' successfully tested by Defence Research and Development Organisation (DRDO). With renewed emphasis on Atmanirbhar Bharat, Indian companies are showing enthusiasm to get stuck into local manufacturing of weapons.Courtesy: ANI

“With the continued thrust of Ministry of Defence towards ‘Átmanirbhar Bharat’ and ‘Make in India’, an enthusiastic response from about a dozen Indian companies was received. All of them have expressed their willingness and commitment to manufacture this complex gun system and associated equipment by ensuring technology assimilation in India. Accordingly, the DAC accorded approval of procurement of Air Defence Guns and Ammunition at an approx. cost of Rs 6,000 crore under the Buy & Make (Indian) category,” a statement issued by the Ministry of Defence said.

This will be the first time that such guns will be made in India. Till date, such orders have always been placed on foreign manufacturers who exported these weapons to India from their bases in foreign countries.

Government betting on Indian companies to deliver

Reacting to the new positive list, Jayant D Patil, President of the Society of Indian Defence Manufacturers (SIDM) said: “The list is comprehensive and has big ticket items that will be built in India and a great boost to making India Atma Nirbhar.”

He added that this indicated that the government and the Indian armed forces had reposed confidence in the ability of Indian industry to deliver cutting edge and disruptive technologies required for the security of the nation. This will help in the development of a domestic military industrial complex that can develop new and disruptive future technologies that have both military and civilian applications.

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