The Telecom Regulatory Authority of India (Trai) believes the panic raised by multinational telecom equipment makers such as Ericsson over local manufacturing was unfounded and that India’s telecom market presents enormous opportunity to align towards Make in India.

“As far as equipment requirement is concerned, the consumers remain 1.2 billion albeit growing. Data consumption and network utilization remains to be high, therefore, networks have to be created locally,” Trai secretary Sunil K Gupta told ETT.

On August 3, this year, the telecom regulator has recommended a need for indigenous manufacturing of telecom equipment, cutting dependence on imports to net zero by 2022, and which according to it, would also create self-reliance and new job opportunities within India.

Multinational vendors such as Swedish Ericsson, Finnish Nokia, and Chinese Huawei and ZTE, however, feel that the Trai’s new proposal was unrealistic and would make their business unviable in the current state of India’s telecom landscape rapidly drifting towards consolidation.

Stockholm-based Ericsson’s India managing director Nitin Bansal, however, countering the telecom watchdog’s proposal has said that a comprehensive manufacturing of telecom equipment in the country was economically and logistically unviable.

India’s telecom sector, after the disruptive foray of billionaire Mukesh Ambani-owned Reliance Jio in September 2016, is headed towards market consolidation with India's second largest Vodafone India and third-largest telco Idea Cellular combining into a single entity.

Interestingly, Mumbai-based Jio has no apparent business engagement with these multinational equipment firms doing brisk business with incumbents such as Bharti Airtel, Vodafone India and Idea Cellular in India till now.

“This is no argument to say that there is no requirement so it is not viable to install production facilities,” Gupta strongly asserted, adding that normally in any country, there are three to four players optimally which provide telecom services.

The regulator, in its recommendation to the government said that it aims to enable Indian telecom equipment manufacturing sector to transition from an import-dependent sector to a global hub of indigenous manufacturing.

Trai also rests its case on growing telecom instrument imports which according to the Directorate General of Commercial Intelligence and Statistics, was $21,847.92 million in 2017-18, up from $16,560.80 million in 2016-17.

On the flip side, local telecom gear companies such as Vihaan Networks Limited (VNL), Himachal Futuristic Communications Limited (HFCL) and Tejas Networks are in direct conflict with multinationals, and expects government to accept regulator’s proposal which is in sync with their long-standing demand of Make in India.

"The Trai’s recommendations have taken several steps in the right direction to boost local manufacturing of telecom equipment with a time bound goal of net zero imports by 2022,” Rajiv Mehrotra, chairman & chief executive of VNL said.

Mehrotra added that the country has the necessary skill sets to not only Make in India but also export telecom equipment worldwide, and only encouragement and incentives from the government were needed.

Homegrown equipment makers, having merely 5% market pie, have already been spending hugely on locally producing telecom products with government-run Centre for Development of Telematics (C-DoT) as their technology partner.

Trai in its proposal, has also listed reasons discouraging domestic manufacturing as pointed out by multinationals that included lack of skilled manpower, institutional mechanism, research and development, patent framework and fiscal incentives, and it, however, did not mention ongoing market consolidation as one of the challenges.

In September 2017, Trai issued a consultation paper inviting comments from stakeholders, and on March 14, 2018, it has conducted an open-house discussion on promoting local telecom gear manufacturing.