Nokia and Ericsson said India’s production-linked incentive (PLI) scheme [1.] for design-led 5G manufacturing will position India as a global manufacturing hub and allow them to deepen their manufacturing capabilities in the country.

Note 1.  PLI is the sum of India government incentives that are directly linked to manufacturing performance. The more goods companies manufacture in India the better incentives they will get. The incentives are of diverse types: subsidies, monetary benefits, etc.

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Nokia said it is exploring opportunities to manufacture more products in India in a cost-competitive manner to serve both the local and the global market. Nokia’s India spokesperson said the company was on track to fulfil its investment and production commitments under the existing PLI scheme for telecom equipment.

Swedish telecom equipment vendor Ericsson, in a separate statement, said 5G spectrum auction with 100% fiberization (backhaul) with public-private partnership (PPP) model by 2025 will help bridge the digital divide for an inclusive development of the nation in-line with the ‘Digital India’ vision.

“Design-led initiatives for 5G under the PLI scheme and 5% of USOF for R&D purposes will strengthen the ‘Make in India’ initiative, and contribute to making India a global manufacturing hub,” said Nitin Bansal, managing director for India at Ericsson.

Ericsson, along with Nokia, Akashastha Technologies, HFCL, Foxconn, Coral Telecom, VVDN Technologies, Dixon Technologies, Tejas Networks and GS India, were selected for the original PLI scheme. India’s Department of Telecommunications (DoT) approved 31 proposals in 2021 entailing investments of INR33.5 billion ($447.3 million) over the next four years.

“The scheme for design-led manufacturing to be launched for the 5G ecosystem as part of PLI will be a boost to the overall telecom and electronic sectors. It will also provide and promote research and development of technology and solutions and will enable affordable broadband and mobile communication,” says Sanjay Gupta, vice president and India managing director, NXP Semiconductors.

Some media reports suggest that it is possible that the funds for this scheme may come from the ongoing PLI scheme for the telecom sector.

The scheme is in keeping with the government’s keenness to position India as a telecom manufacturing destination with a growing emphasis on self-reliance and the domestic manufacturing ecosystem.

Chinese gear makers Huawei and ZTE are yet to receive trusted source approval from the National Cyber Security Coordinator (NCSC), which means the space is open to Indian manufacturers.

It’s possible that the government may mandate the Indian service providers to procure a certain percentage of their requirement from the Indian vendors only.  The PLI scheme is timely, with the announcement that the 5G spectrum auction will be held in 2022.

Service providers are in the midst of conducting 5G trials, and will be investing heavily in 2022 to build networks. 5G capex is likely to increase significantly over the next few years – hopefully helping Indian manufacturers grab some share of the pie.