India’s telecom manufacturing sector has strong growth potential but continues to face high import dependence. A NITI Aayog report has called for stronger policy support to expand domestic production, increase exports and improve India’s position in the global supply chain.
The report said the sector could double its GDP contribution and help India become a USD 50 billion export hub by 2035. It also highlighted the need to address trade imbalances and increase domestic value addition.
Telecom Manufacturing Faces a Significant Trade Gap
The telecom and network equipment sector forms a critical part of India’s digital infrastructure. However, domestic production has not kept pace with demand.
Telecom and network equipment exports accounted for only 0.2-0.3 per cent of India’s total exports during 2020-24. Annual exports stood at around USD 0.6-1 billion.
Imports, meanwhile, reached USD 4-5 billion annually. This represented around 0.7-1.1 per cent of total imports.
The report also highlighted India’s dependence on China for critical components. More than 80 per cent of components such as 4G/5G antennas and signal processors are sourced from China.
Telecom Manufacturing Needs Higher Domestic Value Addition
India’s telecom supply chain remains dependent on specialised global suppliers. Different regions provide key components such as chipsets, optical transceivers and intellectual property.
This structure creates exposure to disruptions in individual markets.
Indian manufacturers also face higher fiscal costs compared with global competitors. The report estimates a disadvantage of up to 26 per cent in high-value telecom manufacturing.
The gap can increase to 29 per cent in product categories where importers receive buyer’s credit for extended periods.
Domestic production also remains concentrated in low-value assembly. Domestic value addition often remains below 20 per cent, limiting the sector’s ability to capture greater value from the manufacturing chain.
Policy Support Could Accelerate Telecom Manufacturing
The government has introduced measures to strengthen domestic production, including the Production Linked Incentive (PLI) scheme.
NITI Aayog estimates that continued policy support could increase the sector’s GDP contribution to 1-1.5 per cent. It could also generate around 500,000 skilled jobs.
The measures could help India develop a USD 50 billion export base by 2035 and strengthen the domestic telecom manufacturing ecosystem.
Telecom Manufacturing Can Support NTP 2025 Goals
The report called for stronger government intervention to address import dependence and improve domestic production capabilities.
A stronger telecom manufacturing ecosystem could support the objectives of the National Telecom Policy 2025. These include a 150 per cent increase in sector output and 50 per cent import substitution.
Expanding domestic production, improving value addition and strengthening supply chains could help India reduce external dependence. It could also create new opportunities for Indian manufacturers in global telecom markets.
The report said sustained policy support could help convert existing supply chain vulnerabilities into an opportunity for India to build a more competitive and export-oriented telecom manufacturing sector.
