5G Can Be The ‘Y2K Moment’ for Telecom Manufacturing in India

While India’s telecom services sector grew, it has missed out on creating a domestic telecom-equipment industry.

(Photo: iStock)

Over the past 20 years, Indian telecom service providers have done a phenomenal job of providing voice and data services across the country at affordable prices. It is unfortunate that while we grew our telecom services sector, unlike China, we completely missed out on creating a vibrant domestic telecom equipment industry. This could have provided the required products for building these large-scale networks, not just for India, but for the world.

As a result, for the past several years, we have been importing more than Rs 100,000 crores worth of foreign equipment each year. These imports have not only been one of the top-3 contributors to our trade deficit, but we also missed out on creating a large knowledge-driven global-scale telecom equipment industry that could rival our success in the IT services industry.

The emergence of 5G, the next generation of mobile broadband standard, offers a unique opportunity for India to reverse this trend. 5G networks will require large-scale investments in new telecom equipment and India can leverage this opportunity to become a disruptive force in the global telecom industry.

With the emergence of Internet-of-Things (IOT), Machine-to-Machine (M2M) communications and increased digitization of societies, cyber-security and a secured network infrastructure are critical needs for any developed country and India has to become self-reliant in this important area.

It is important to note the recent global developments, where all major developed countries (including USA, Japan, UK, Canada Australia etc.) have banned the use of 5G equipment from certain sources, due to security concerns.

The good news is that 5G plays directly into India’s sweet spot and we can enable our core strengths of software and R&D talent and a large home market to become a strong global player.

Software and R&D Competency

Historically, every major technology transition in the telecommunications sector has disrupted the old order and opened up opportunities for innovative startups to dislodge incumbents that had failed to adapt to evolving industry demands.

For example, the transition from fixed-line phones to wireless (2G) in the early ‘90s spawned companies like Nokia that had strong intellectual property in the wireless space and the emergence of Internet in the late ‘90s created companies like Cisco and Juniper that had expertise in packet technologies.

Similarly, with the advent of 5G, software along with design and IPR will become the core competencies and primary differentiators for success in this new era. Since India has a large technology talent pool with world-class skills in software and R&D, 5G offers a rare opportunity for India to become a global leader in the telecom sector.

Large and Growing Home Market

One of the biggest assets that we possess today is a large and growing domestic market. Countries that are ahead of us in ICT products, such as China and USA, have leveraged their large domestic demand to create a demand-pull for their domestic industry using favorable market-access policies and helped their domestic companies gain global size.

Once we create Indian products, it is important that we provide them fair market-access to sell such products in our large domestic market, without which they won’t be able to compete against established global players.

Moreover, the cost/quality/technology needs of India also reflect the requirements of many other countries in the emerging markets in Africa, SE Asia, Latin America etc., which represents nearly half the world’s population and have India-like needs.

The recent security and trade concerns around the world, for telecom products from certain countries, have created an opportunity for India, which has built a solid reputation for being a neutral, trust-worthy source of high-technology services and products.

Focus on Design-led Manufacturing

The classical “Factory-led Manufacturing”, which is currently dominated by China, has largely failed to deliver dividends for most countries. This is because in the case of high-technology ICT products, over 50 percent of value-addition resides in the design, R&D and software elements and the actual manufacturing process contributes less than 10 percent.

Secondly, with the growing prominence of robotics and automation in electronics manufacturing, it becomes possible to produce almost double the number of electronics goods with half the number of shop floor workers as compared to a decade ago.

Design-led Manufacturing in 5G can catalyse the domestic ICT sector by creating a complete indigenous product ecosystem including systems (wireless, optical, switches/routers and network management), customer devices (handsets, CPE, dongles), related software, system-on-chips (using our strengths in fabless designs skills) and other high-value and critical components. We should also scale-up our EMS (contract manufacturing) capabilities to manufacture high-value-added products within the country.

Indian IPR in 5G Standards

When 2G/3G and 4G standards were being defined, India never played any role. However, for 5G standards, thanks to proactive efforts from the Indian Government and the telecom industry, India is now playing an active role in defining the requirements of the 5G standard through TSDSI (Telecom Standards Body of India).

This will not only provide an opportunity for our domestic companies to create IPR and essential patents, but also create cost-effective solutions for our consumers, who otherwise have to force-fit western specifications into their needs.

Active Government Support for 5G

Last year, the government of India constituted a high-level committee to work out an ambitious vision, road-map and action plan to make the country a front-runner in the global 5G race.

Based on the committee’s recommendations, the Department of Telecommunications (DoT) has recently allocated a budget of Rs 240 crores to create a national 5G test bed that will enable Indian companies, academia and startups to conduct cutting-edge research on 5G-related technologies.

Further, the new National Digital Communications Policy (NDCP 2018) and the recently updated Preference to Make in India policy (PMI) too emphasise promotion of Indian products with domestic IPR in government procurements.

Have We Missed the 5G Bus?

We haven’t missed the bus on 5G: Large–scale rollout of 5G networks in India are still 2-3 years away and if we treat this opportunity as a “national mission”, we can build our 5G networks with mostly indigenous products, reduce our import dependence, address our security concerns and also become a net exporter (from being a large importer) of telecom products over the next decade.

We can use 5G to emerge as a major global force in design-led manufacturing in telecom and electronics sector, in the same way that we leveraged the “Y2K” opportunity to build a $100 billion IT services industry.

The author, Sanjay Nayak, is CEO at Tejas Networks. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.