Samsung Electronics is likely to apply for the Rs 12,195-crore production-linked incentive (PLI) scheme, benefiting from the federal program to locally make 4G and 5G gear and other equipment – for sales both in India and overseas.
The South Korean electronics major expects to supply telecom gear to its only telco customer in India so far, Reliance Jio, besides global clients from its factory that is expected to come up in Uttar Pradesh, a company official told ET. Samsung would then join other global manufacturers such as Cisco, Jabil, Flex and Foxconn, besides European telecom equipment vendors Nokia and Ericsson in applying for the PLI scheme that seeks to boost local production of telecom equipment and reduce imports..
Any big company getting approved under the scheme will have to invest Rs 100 crore to set up the production lines and machinery to avail benefits. For inclusion of MSMEs in the scheme, the minimum investment threshold has been kept at Rs 10 crore.
“Samsung is looking to have diversified manufacturing given that it has recently won 5G business globally. Jio, however, is its most critical and largest client globally,” the official said.
The Korean company’s exclusive tie-up with Reliance Jio on 4G has already ended and the Mukesh Ambani-led telco has stressed its intention of building everything related to 5G in India.
“They (Samsung) want to support Jio’s network from a local manufacturing unit since there is a push for make in India,” a senior Jio executive added.
Jio, on its part, is still discussing manufacturing partnerships for its own 5G equipment in the country and is expected to give orders to manufacturers with “tier-1” facilities located within India.
“Jio’s own design will be given to mass manufacturers. The talks are at an advanced level since the deployment will be done quickly after the 5G spectrum auction later this year,” the Jio executive said. “Jio will not procure anything from outside. Everything will be made in India.”
Queries sent to Samsung and Jio didn’t elicit any response.
Bank of America Merrill Lynch, in a recent report, said that Jio may depend on its 4G gear partner Samsung so that its 5G equipment is backward compatible. “If Samsung starts assembling/manufacturing 5G massive MIMO/RU in India, then Jio’s entire 5G stack in theory would be ‘Made in India’,” said the report.
Equipment makers, including Samsung, are awaiting the final guidelines of the PLI scheme, which will specify how many global and local companies would be selected.
The scheme for telecom equipment will offer incentives to the selected companies for incremental production over the base year. It would be operational from April 1 and the government expects it to lead to incremental production of around Rs 2.4 lakh crore, with exports of around Rs 1.95 lakh crore over five years.
The scheme will cover core and transmission equipment, 4G/5G next generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers etc. Koliasa