Make in India

The Prime Minister, Dr Manmohan Singh, has quite rightly voiced his concern over the country becoming a large and perennial importer of telecom gear. Quite apart from the phenomenon representing a facet of our technological vulnerability, the rupee's recent depreciation has made imports expensive too, undermining efforts at increasing teledensity. The Indian market for telecom equipment – from switches, routers and base station systems to microwave radios, optical fibre links and mobile handsets – was estimated at Rs 54,675 crore in 2009-10. The Telecom Regulatory Authority of India reckons that just over 12 per cent of this demand was met through domestic value addition. The balance comprised imports, whether in final product form or as parts for local assembly. Moreover, the size of the market is projected to grow to Rs 108,096 crore in 2015-16 and Rs 170,091 crore by 2019-20. Much of it would be powered by the increased rollout of 3G mobile services in the immediate short-term, followed by the more advanced 4G wireless broadband networks.

That such demand can be overwhelmingly met through imports is neither a feasible nor a desirable proposition. It is, indeed, quite incredible how a country with the world's second largest telecom subscriber base of 900 million-plus (from a mere 40 million a decade ago) has not leveraged these numbers to build a robust manufacturing base at home. Comparisons with China may be odious, but the fact that Huawei and ZTE have emerged from nowhere to become leading global telecom equipment suppliers, including to India, is something definitely to ponder over. India missed the bus during the heady 2G growth phase; it should not let go the opportunities presented by next generation networks. How it must be done is the question to ask.

The one thing the Government should ensure in promoting a vibrant local industry is not to discriminate between foreign and Indian players. The sole objective must be to encourage domestic manufacturing with a view to reduce import dependency and create employment opportunities here. Who does it should not be a consideration at all. Also, there need not be any insistence on foreign equipment majors transferring or sharing their IPR locally. Such conditions will only discourage them from setting up plants, especially after their bitter experience of patent infringements and ‘forced' technology transfers in China. The model that is worth following and building on is actually Nokia's successful manufacturing experience in India. The Finnish company has its largest factory at Sriperumbudur that sources chargers, casings and other components from the likes of Flextronics and Foxconn, who, in turn, have established their own facilities around Nokia's. Having a sound local production ecosystem has substantially cushioned Nokia from the impact of the rupee's weakening, which has forced most other handset makers (read importers from China) to raise prices. Depreciation will hopefully stimulate more such ventures.

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