In a bid to encourage Indian telecom gear manufacturers, the Telecom Regulatory Authority of India has suggested a blueprint that will cost the exchequer Rs 1 lakh crore over a 10-year period.
The regulator reckons that the returns will be almost 10 times the investment.
According to the TRAI, the demand for telecom equipment in India was Rs 54,765 crore in 2009-10 which was about 5.5 per cent of the global demand. This is projected to grow to Rs 96,514 crore in 2015 and Rs 1,70,091 crore in 2020.
“Despite the high demand for telecom equipment, the domestic telecom equipment manufacturing industry has not been able to keep pace. The contribution of all domestic products towards meeting the country's demand for telecom equipment has only been 12-13 per cent in 2009-10 while Indian products could meet just 3 per cent of the Indian demand,” TRAI said.
The regulator wants the share of the Indian products to be progressively enhanced to cater to at least 50 per cent of the demand by 2019-20.
To spur the local manufacturing segment, TRAI has suggested that the domestic manufactured products are proposed to be given preferential market access. All local players with annual turnover less than Rs 1,000 crore would get subsidy for equity capital and working capital for a period of 5 years.
Semiconductor chips are important constituents of all telecom equipment. The India market for semiconductor chips is around $8 billion. About 30-60 per cent of the total value of the Bill of Material is taken up by semiconductors.
India designs a large number of chips for other countries but does not manufacture chips on its own designs. TRAI has, therefore, recommended setting up of two Fab units with Government assistance.