Tejas proposes to spend Rs 1,769 cr on telecom equipment

Proposal is the largest received by dept of electronics under M-SIPS subsidy scheme

Among the 15 proposals worth Rs 5,000 crore received by the government under the modified special incentive package scheme (M-SIPS), its electronics manufacturing subsidy programme, the largest one has come from telecom equipment maker Tejas Networks, followed by Samsung Electronics and semiconductor testing firm Tessolve Services.

Tejas, which has applied for subsidy to the department of electronics and information technology, plans to invest around Rs 1,769 crore to build and expand its capabilities in the area of new generation technologies such as 3G and 4G LTE (long-term evolution).

Sanjay Nayak, co-founder and chief executive officer of the Bangalore-based company confirmed the investment proposal. He said India was seeing resurgence in such  equipment as data was going to play a key role in the next phase of telecom growth.

Nayak said because of the initial focus of Tejas on optical transport equipment, the company was earlier able to address only 10 per cent of the overall opportunities. “With the new investments and product ranges, Tejas Networks is targeting to address about 60 per cent of the overall needs of telecom operators in the next 10 months, which will gradually increase after that.”

The funds to be invested over a period of time, will go towards expanding the company’s existing capabilities in Bangalore and Pondicherry.

Apart from Tejas, Samsung Electronics has proposed an investment of Rs 844 crore and Tessolve Services, a semiconductor testing company, plans to invest Rs 750 crore.

The government announced the M-SIPS last year, with the objective of attracting electronics manufacturing firms to invest in the country. Under the scheme, the government will give up to 25 per cent subsidy on capital expenditure.

Official sources say the responses have been good. However, they have been tight-lipped about the details of the proposals so far, with the exception of Bosch Electronics and Samsung. Both proposals were disclosed by minister of communications and information technology Kapil Sibal in the beginning of this year.

According to government statistics, the electronics demand in the country is expected to touch $400 billion by 2020. Unless domestic manufacturing is  incentivised, the country’s electronics imports could reach $300 billion by 2020, exceeding those of crude oil.

Taking cognizance of this fact, the government has announced a slew of measures under the National Electronics Policy 2011, which include various subsidies and schemes to boost electronics manufacturing, along with a proposal to subsidise semiconductor chip manufacturing facilities.

While Bosch has committed funds of around Rs 550 crore, other proposals include those of Centrum Electronics and NIC Green Solutions. In an email response, a spokesperson of Samsung said the company was looking at strengthening its manufacturing presence in the country to fulfil the growing needs in the market. It, however, did not divulge details about the investment.

The country representative of Bosch refused to comment on the proposal while Tessolve did not respond to queries sent by Business Standard. Centrum Electronics and NIC Green Solutions could not be reached  for a comment.