India will soon launch a production-linked incentive (PLI) scheme for 5G equipment, according to India's Finance Minister Nirmala Sitharaman in her budget speech yesterday.

The details are likely to be revealed later this week. The government is expected to allocate INR40 billion (US$0.53 billion) for the scheme.

"Design-led initiatives for 5G under the PLI and 5% of USOF for R&D purposes will strengthen the 'Make in India' initiative, and contribute to making India a global manufacturing hub," said Ericsson's Nitin Bansal in a statement.

Figure 1: Self-reliant: The scheme is the latest move by the Indian government to push domestic kit makers.
(Source: rahul jarwal on Unsplash)

Ericsson, along with Nokia, Akashastha Technologies, HFCL, Foxconn, Coral Telecom, VVDN Technologies, Dixon Technologies, Tejas Networks and GS India, were selected for the original PLI scheme. The Department of Telecommunications (DoT) approved 31 proposals in 2021 entailing investments of INR33.5 billion ($447.3 million) over the next four years.

"The scheme for design-led manufacturing to be launched for the 5G ecosystem as part of PLI will be a boost to the overall telecom and electronic sectors. It will also provide and promote research and development of technology and solutions and will enable affordable broadband and mobile communication," says Sanjay Gupta, vice president and India managing director, NXP Semiconductors.

Some media reports suggest that it is possible that the funds for this scheme may come from the ongoing PLI scheme for the telecom sector.

Do it yourself

The scheme is in keeping with the government's keenness to position India as a telecom manufacturing destination with a growing emphasis on self-reliance and the domestic manufacturing ecosystem.

Additionally, Chinese gear makers Huawei and ZTE are yet to receive trusted source approval from the National Cyber Security Coordinator (NCSC), which means the space is open to Indian manufacturers.

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It is possible that the government may mandate the Indian service providers to procure a certain percentage of their requirement from the Indian vendors only.

The PLI scheme is timely, with the announcement that the 5G spectrum auction will be held in 2022.

Service providers are in the midst of conducting 5G trials, and will be investing heavily in 2022 to build networks. 5G capex is likely to increase significantly over the next few years – helping Indian manufacturers grab some share of the pie.

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— Gagandeep Kaur, contributing editor, special to Light Reading