Equipment-making to be $40-bn industry by 2010

New Delhi, Nov 20 | Updated: Nov 21 2005, 05:44am hrs
Telecom equipment manufacturing in India can become a $40-billion industry by the year 2010. The draft New Telecom Policy (NTP) 2005 is understood to have put a thrust on manufacturing telecom equipment indigenously.

"India has emerged as the fastest growing market for telecommunications and a significant market for global telecom vendors," says the draft. The draft expects there would be need for telecom equipment worth $40 billion by 2010. Leveraging on the combined volumes from large domestic demand for the telecom equipment and huge opportunity of export to Asia-Pacific regions, the NTP foresees "tremendous potential for telecom manufacturing in India."

Finland's handset major Nokia Oyj has already announced plans to start manufacturing handsets at its Chennai plant by next year. Another original equipment manufacturer (OEM) -- Elcoteq -- from Finland is already present in the country with manufacturing terminal products (largely handsets) at its Bangalore plant. Recently, Motorola announced plans to soon start assembling and, later, manufacturing handsets in India.

The draft says, "Considering 75% of the demand (out of the $40 billion requirement) is to be met through indigenous manufacturing and an export potential of $10 billion, total telecom equipment production target could be $40 billion."

To realise its potential, the draft says, "India has to position itself as a regional hub for telecom manufacturing."

The NTP has identified high cost; inadequate infrastructure; high taxation; multiple/inflexible labour laws, costly finance; and low research and development (R&D) expenditure as major impediments to the manufacturing sector in the country. The draft, however, falls short of discussing as to how to remove these impediments.

Nevertheless, it says, "Indigenous manufacturing of the telecom equipment will be promoted to meet various objectives of inter-alia."

The draft also proposes to encourage and accelerate the process of international infrastructure vendors setting up manufacturing facilities in India as has happened in the past one year.