Dell_20181213

Sandeep Aggarwal
Co-Chairman
TEPC

Exclusive Article

The telecom equipment industry can broadly be divided into passive and active equipment industry.

Optical fiber cable, towers, GPONs, etc., constitute the passive portion, and thankfully India is fully capable to meet its own demand and even export the same.

Sterlite, Paramount, Birla, HFCL, etc., are some of the major producers of optical fiber cable in India.

India has a capacity of 900 tons of optical fiber preform (30 million fiber kilometer equivalent) and imports another 30 million fkm equivalent of preform and fiber, but India is also exporting about 5 million fkm of optical fiber and optical fiber cables. India’s consumption of optical fiber has touched 55 million fkm, which is second only to China.

Reliance Jio, Bharat Broadband through BSNL, and state-led model along with operators, are aggressively building optical fiber networks. We need to reduce imports of optical fiber preform in view of recent and proposed increase in domestic preform capacity to 50 million fkm. Thankfully, almost 95 percent of optical fiber cable is domestically produced. The industry turnover is about USD 1 billion.

We all know that the passive components of all telecom towers are made in India, similarly the GPON equipment in the BharatNet project is as per C-DoT design and, therefore, made and designed in India.

India was manufacturing active telecom switches much before many other countries, but is unfortunately lagging behind its Chinese, Japanese, Korean, US, Swedish, and Finnish counterparts now.

The main culprit is lack of research and development by Indian vendors and the policy of GoI to import rather than buying from Indian vendors. In 1980s, GoI tried to import technology and manufacture exchanges in India, but the technology was never fully transferred.

Also, ITI who was given the task of absorbing and doing R&D for further improvements was unable to do so.

The C-DoT experiment was initially successful and a lot of exchanges, designed and developed by C-DoT, and manufactured by its Indian licenses, were used to cater to the demand of low-cost rural switches. Many exchanges were exported too.

GoI meanwhile allowed private operators, who preferred imported equipment, and soon the demand for C-DoT and other Indian-manufactured equipment progressively decreased as a percentage of the total Indian consumption.

The US and China have decided to use telecom equipment and mobile phones with components from friendly countries only. They are the same countries, which regularly use their equipment to snoop and interfere in foreign countries’ internal affairs.

Today, India produces 29 crore mobile phones worth Rs 170,000 crore and is also the second-largest consumer of mobile phones, but we have done very little R&D in mobile phones and our domestic value-add is very low at 17 percent.

We suggest that to save foreign exchange of USD 300 billion by 2025, India should plan its own fabs for manufacturing and make it mandatory for all mobile phone and equipment companies to source at least 50 percent value of Made in India components (meeting the PMI norms, having at least 50 percent Indian value-added). Manufacture and domestic sale
of equipment should also be considered as deemed
export.

India needs to have its research, design, and manufacturing of telecom equipment and should follow the US and China model, in which huge funds were made available to their domestic manufactures and billions of dollars of confirmed orders were made available to them through defense and government buying.

We also suggest GoI to start with a billion-dollar R&D fund to design and develop cutting edge technologies and products.

Substantial spin-off benefits shall accrue in the electronics, defence, space, mobile, optical fiber, and solar industry with many more tangible and intangible benefits.

The Indian telcos are facing huge cash crunch and are, therefore, attracted to line-of-credit facilities when they buy equipment from Korea, Japan, China, the US, or Europe.

Indian vendors, reeling under banking squeeze and high interest rates, are unable to match the long-term credit, even if in some cases, they can match price, specification, and quality.

We suggest initially a one-billion dollar domestic line of credit be introduced to encourage Indian telcos to buy PMI-compliant Indian products.

India will be a trillion-dollar digital economy and a 5-trillion dollar economy by 2025 and by 2030, the second-largest economy (PPP) in the world, and we shall be the providers of goods to the world while importing only non-critical parts and components.

India has a great future ahead!!   

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