India will play a bigger role in Finnish telecom gear maker Nokia’s global supply chains as the company proposes to make it a manufacturing and export base. However, a fairly steep cost disadvantage for some locally- sourced components might emerge as a constraint in greater localisation, according to a senior company executive.
Expanding India’s role in Nokia’s global supply chain will depend in part on whether local suppliers can become competitive as other hubs in Asia. “There are disabilities, as we call it. If you buy something from Vietnam or China, we’ve seen the differential in pricing is in the range of 20% to almost 80%, depending on different components,” Vibha Mehra, India Country Manager, Nokia said in an interaction with Fe.
A stronger domestic supplier base would reduce dependence on imports and help the company manage risks arising from import duties and geopolitical disruptions, Mehra said.
Nokia’s Chennai factory, which has been operational for around 17 years, has produced more than 8 million telecom units and now exports about 40-45% of its output, according to Mehra. The company is looking to increase exports further, after production was temporarily skewed towards the domestic market during the peak of India’s 5G rollout.
Meanwhile, the government has been pushing for localization through schemes like the Telecom Production Linked Incentive (PLI), launched in 2021 and Electronics Component Manufacturing Scheme (ECMS), launched last year to create a steady ecosystem with competitive advantage to domestic companies.
Nokia applies three tests before localising any component –quality, quantity and price with price remaining the most common sticking point. Meanwhile, the company is yet to fully avail benefits from the recently approved projects under the ECMS scheme. To which, Mehra said that it will take time before those suppliers are producing commercially and can pass its own qualification process, which it called stringent given the reliability demands of telecom networks.
Meanwhile, Nokia is preparing for the next phase of the telecom PLI, after the existing scheme expires in March 2027. The company said it met every annual target under PLI 2.0 on employment and revenue.
Mehra said that AI is increasingly becoming a native part of its network architecture, including autonomous networks, fixed networks and optical solutions. AI can be added as an overlay to existing RAN deployments to improve operational efficiency, she said adding that Nokia is embedding AI directly into the design of autonomous networks, allowing networks to be managed and automated with greater independence.