Draft telecom policy proposes incentives for using made-in-India gear

New Delhi: The government is looking to incentivise telecom operators for using indigenously designed and manufactured equipment, according to the draft National Telecom Policy (NTP), 2025.

The move could boost local gear makers such as Tejas Networks, HFCL, STL, and startups in the domain and level the playing field with global manufacturers, including Nokia, Ericsson, Samsung and Cisco. 

Currently, private telecom operators largely rely on global companies to provide network equipment for rolling out their 5G services and expanding their 4 G network.

The proposal echoes a similar provision in the 2018 policy that saw little implementation, raising concerns about execution this time.

“Incentives for telecom operators to buy domestic telecom products was also part of the last National Digital Communications Policy – 2018. However, we did not see any implementation of the same,” said Rakesh Bhatnagar, director general of Voice of Indian Commtech Enterprises (VoICE), which represents local gear makers.

Bhatnagar said several Indian startups and companies are capable of supplying quality telecom equipment, but operators need support, including lower levies, so they can start using locally made gear.

The draft NTP 2025 does not detail the kind of incentives to be given to telecom operators for using locally designed and manufactured equipment.

“Incentivising the use of locally designed and manufactured telecom gear is a welcome move, but we’ve seen similar efforts before. The telecom PLI scheme, despite good intent, saw limited uptake: by FY25, only around half of the approved companies reportedly received payouts,” said Sumeysh Srivastava, associate director at the public policy firm The Quantum Hub (TQH).

According to Srivastava, without clear demand signals, streamlined procurement, and better alignment across policy levers, manufacturers will continue to face scale and cost challenges. The policy needs to go beyond incentives. 

Starting from building trust in Indian R&D, ensuring timely disbursements, and fostering an ecosystem designed to compete globally, not just comply locally, he said.

On 23 May, Mint reported that out of the 42 companies that were shortlisted for the telecom PLI scheme, only half claimed incentives. Citing a Right To Information (RTI) request, Mint reported that the scheme disbursed ₹1,162.04 crore by the end of FY25, against the ₹12,195 crore approved for five years. The scheme was introduced in February 2021 to incentivize the local manufacture of equipment such as network switches, transmission gear and set-top boxes.

Policy goals

The draft policy focuses on six strategic missions for the telecom sector with certain goals for the next five years. This includes universal, meaningful and affordable connectivity, promoting innovation and research and development, domestic manufacturing, secure and trusted telecom network, ease of doing business and sustainable telecom.

The draft NTP 2025 is open for public consultation for the next 21 days.

Among its local manufacturing goals, the government aims to increase domestic telecom manufacturing output by 150%. It aims to achieve 50% import substitution through telecom products designed, developed, and manufactured in the country, according to the draft policy.

According to a 2024 report by NITI Aayog, more than 40% of telecom equipment such as 4G/5G signal processing units and antenna, are imported from China.

The draft outlines 10 objectives for the next five years. This includes universal and meaningful connectivity for all, doubling the contribution of the sector to India’s GDP, and achieving an annual investment of ₹1 trillion in the sector.

It also plans to double the export of telecom products and services, and double the number of telecommunications startups.

Besides, the government is also looking to double the sectoral research and development spending on emerging telecom technologies, create 1 million new jobs, upskill/reskill 1 million workers to meet the future demand, and strengthen security using quantum communications. The government also aims to reduce the carbon footprint of the sector by 30%.

On 27 May, Mint reported that the five-year National Telecom Policy 2025-2030 will have a key focus on R&D on new telecom technologies, specifying details on the draft policy.

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Universal connectivity

As part of the universal connectivity goal, the government is looking to cover 100% of the population by 4G and 90% by 5G, with accessibility of devices for all.

The goal is to also increase fiberization of towers from 46% to 80% and achieve fiberization of all gram panchayats (GPs) under BharatNet with an uptime of over 98%, according to the draft policy.

To be sure, the government had set a target to achieve 70% tower fiberization by FY25. Tower fiberization refers to the process of connecting mobile towers to high-speed fiber-optic networks. This ensures quality of services for consumers.

In fact, the 2018 policy had set targets to provide universal broadband connectivity, increase the digital communications sector’s contribution to GDP to 8% from 6% in 2017, create 4 million jobs, and fiberization of at least 60% of towers, among other areas, by 2022.

According to industry executives, in some of the areas such as public Wi-Fi hotspots, tower fiberization, targets for BharatNet connectivity, and home broadband penetration, the progress has been slow.

Over the next five years, the government plans to enable the provision of fixed-line broadband networks to 45 million to 100 million households in the country, deploy 1 million public Wi-Fi hotspots, and use community Wi-Fi networks as an alternative for last-mile connectivity.

According to Srivastava of The Quantum Hub, the policy consciously avoids thornier questions around regulating OTT communication platforms, a long-standing ask from the industry.

In the emerging technology area, the government is looking to handhold 500 tech startups and MSMEs specializing in emerging technologies. The goal is to attain 10% global share in 6G-related intellectual property rights (IPRs).

“(The government will) introduce innovative financing models like funds of funds, blended finance etc, to expand funding opportunities for the pool of telecom startups in India,” the draft policy said.

For safety and security of telecom networks, the government has also talked about conducting analysis of telecom and networking equipment deployed in telecom network to demarcate and segregate equipment from non-trusted sources.