Boosting India’s 5G Manufacturing: A Major Policy Shift

New Delhi: The Department of Telecommunications (DoT) has taken a significant step towards fortifying India’s 5G technology landscape. In its latest public procurement policy order, a new clause has been introduced aimed at providing preferential treatment to domestic companies that can demonstrate scale and capacity in manufacturing local 5G products.

Empowering Local Innovators

This strategic move is designed to give Indian companies a competitive edge over international players when it comes to securing public sector contracts for 5G equipment. Telecom Secretary Neeraj Mittal shared insights on the intent behind this initiative, stating, “The goal is to signal our commitment to transforming India into a hub for telecom products, particularly in cutting-edge technologies like 5G and the future 6G.

“As local Indian companies gear up to produce these goods at scale, they will naturally become the preferred suppliers for our ‘Make in India’ orders, ensuring sourcing happens within our borders,” he elaborated to the Economic Times.

Guidelines Unveiled

Previously, while formulating draft guidelines aimed at promotion of ‘Make in India,’ the DoT had identified a list of 36 products requiring over 50% local value addition for procurement eligibility by the central government and its affiliated bodies. However, 5G products were notably excluded from this list, raising concerns among local manufacturers.

The good news is that the DoT has now finalized the rules, effectively incorporating local 5G products into the procurement discussion. The government has also acknowledged that indigenous 5G technologies are currently undergoing trials across the nation.

Manufacturing Capacity and Collaboration

As per the recent notification from the DoT, the list of products in “Table-A” will be periodically reviewed, with future additions of 5G products and virtual routers based on manufacturing capacity. Domestic manufacturers and their associations are invited to proactively present evidence of their manufacturing capabilities to the DoT for potential inclusion.

Experts indicate that more than ten Indian companies such as Tejas, Lekha Wireless, VVDN, and Galore are gearing up to produce 5G technology, with some already conducting trials utilizing BSNL spectrum.

Local Content Requirements

This initiative outlines that the current list of products requiring a minimum of 50% local content includes routers, Ethernet switches, media gateways, customer premises equipment, GPON equipment, satellite phones, optical fibre and cables, and telecom batteries. In certain cases, the demand for local content jumps to 65%.

Moreover, to bolster the ‘Make in India’ initiative, the government has tightened regulations, ruling that imported items sourced from local resellers and distributors will not contribute to local content calculations.

Notably, royalties, technical charges paid overseas, and supplies of repackaged or refurbished goods are also excluded from the local content calculations, as per the latest directives from the Department of Promotion of Industry and Internal Trade.

Understanding Supplier Classifications

The identified 36 products are believed to have a robust local capacity and competition, allowing preference to be given to class-I suppliers in public procurement. If a class-I supplier cannot meet demand, class-II suppliers will then be considered.

To clarify, a class-I local supplier is defined as one whose goods and services boast at least 50% local content, while a class-II supplier has at least 20% local content. All manufacturers participating in the Production Linked Incentive (PLI) scheme for telecom and networking products are categorized as class-II suppliers for the specified products.