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India will have its own big telecom equipment manufacturers soon: C-DOT CEO

Rajkumar Upadhyay said that the Centre's push for domestic design and manufacturing of telecom equipment will help India to compete with global majors

Telecom

BS Web Team New Delhi
Highlighting the confidence in India's telecom equipment manufacturing capability, Centre for Development of Telematics (C-DOT) chief executive officer (CEO) Rajkumar Upadhyay said that in the next two to three years, India would have "at least 2-3 Ericssons, Huaweis and Nokias". In an exclusive interview with The Financial Express (FE), he said that the Centre has already started receiving interest from other countries for its indigenous technology.

Founded in 1984, C-DOT is a government of India-owned telecom tech development centre. It was founded to design and develop digital exchanges. It recently came into the limelight by developing India's own 4G-5G technology stack. It is software that takes care of end-to-end call control over the network. The stack has been tested for launching 4G services by BSNL.

Upadhyay told FE that once the solutions are deployed successfully by BSNL, C-DOT will start partnering with other operators like Vodafone Idea, Bharti Airtel and Jio. He added that C-DOT is also working on 4G-5G radios. It will come up with 5G radios this year.

Upadhyay also said that the Centre's push for domestic design and telecom equipment manufacturing will help India compete with global majors.

Which companies dominate the global telecom equipment manufacturing race?

Globally, there are only a handful of companies that account for the lion's share in the global telecom manufacturing market. According to a 2022 report by Dell'Oro, China's Huawei leads the list with 28.7 per cent of the market share of the revenue.

However, it continues to face problems in the USA and some other countries outside China.

With a market cap of $205.9 billion, according to companies marketcap, US-based Cisco is the largest telecom equipment company in the world. It is followed by Motorola Solutions and Sweden-based Ericsson with a market cap of $48.8 billion and $20.19 billion, respectively.

Huawei's troubles

The Chinese company has been under fire in the US since 2019. In May 2019, US President Donald Trump put Huawei and some other Chinese companies on the Entity List. Companies on this list are not allowed to do business with any company in the US. 

After this, Huawei smartphones were unable to ship to the US with Google-owned apps. The main accusation against the company was that it used its products to spy on other nations. This was worrisome because it enjoyed close ties with the CCP government in China.

In 2022, an FBI investigation found that Huawei equipment can be used to disrupt US military communications, including those about the US nuclear arsenal. Some former chiefs of CIA have also repeatedly highlighted that Huawei poses a security threat to US.   

Days after Trump's announcement, Google announced it would comply with the ban. Huawei has tried to get the ban lifted, but success has only been limited so far. 

It is also banned in other America-friendly coutries like Australia and Japan.

In India, too, the company has been under the hammer of authorities for a while now. In 2022, the Income Tax department filed a case against top Huawei Telecommunications (India) officials, including CEO Li Xiongwei and three others, alleging that the company withholds important tax information. The other officers involved are deputy CFO Sandeep Bhatia, tax head Amit Duggal, and transfer pricing in-charge Long Cheng.

The I-T department had earlier accused Huawei of transferring a major chunk of money to its parent firm in China as dividends. It was around $94 million and trimmed its taxable income in India. A search operation was launched at several premises of Huawei in India to look into the irregularities.

The company has, however, continued to deny the charges.

Which companies manufacture telecom equipment in India?

Several global companies, including Ericsson, and Motorola, have manufacturing centres in India. Chennai is the hub of such manufacturing. Ericsson's facility in the city conducts research and works on global delivery services. Finland-based Nokia has its Global Network Operation Centre for Customers in Asia Pacific Region, Europe, the Middle East and Africa in Chennai.

However, several Indian firms are indigenously developing telecom equipment in India. The biggest among these is Indus Towers. The second on the list is Tata-backed Tejas Networks. Tejas is working with C-DOT to develop a 4G-5G stack. ITI, HFCL and Black Box are some of the other major telecom equipment companies in India.

How is the Centre encouraging telecom equipment production?

In 2021, the Centre approved Rs 12,195 crore production-linked incentive (PLI) scheme for telecom gear manufacturing. It became operational on April 1, 2021. It was expected to attract investments worth Rs 2.4 trillion over five years. 31 companies, comprising 16 MSMEs and 15 Non-MSMEs (8 Domestic and 7 Global companies), were found eligible and approved for the PLI scheme.

In the Union budget of FY23, the Centre announced another design-led PLI Scheme for telecom and networking products. It provided an additional incentive of 1 per cent over and above the existing incentives for products that are designed and manufactured in India.

The design-led PLI scheme was launched in June 2022, and applications were invited to availing incentives under the PLI Scheme for five years from April 1, 2022.

The existing companies under the PLI scheme for telecom and networking products were allowed to add more products and apply under the design-led PLI scheme. They were also given the benefit of shifting their 5-year PLI Scheme period by one year. Twenty-two companies availed this opportunity of shifting their first year, which includes 13 companies who have applied as fresh applicants. 

Centre said that it was expected to generate additional employment of more than 44,000 over the scheme period.

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First Published: Apr 18 2023 | 1:07 PM IST

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