NITI Aayog: Urgent policy needed to cut China telecom import reliance

A NITI Aayog report says India's telecom sector needs urgent policy support to curb heavy import reliance on China. It suggests boosting domestic manufacturing to become a USD 50 billion export hub by 2035 and double the sector's GDP share.

While India's telecom and network equipment (TANE) sector has strong growth potential, heavy import dependence, especially on China--underscores the need for urgent policy support to boost domestic manufacturing and exports that will likely double the sector's GDP share and position India as a USD 50 billion export hub by 2035, according to a NITI Aayog report.

The TANE ecosystem forms the backbone of modern global connectivity; however, the sector stands at a critical juncture with sharp trade imbalances underscoring an urgent need for targeted intervention. As per the report, the sector has the potential to drive the National Telecom Policy 2025 (NTP-25) goals of universal connectivity, double GDP contribution achieving USD 1 trillion in exports by 2030.

Trade Imbalance and Import Dependence

However, domestic telecom and network equipment exports remain marginal at 0.2-0.3 per cent of total exports, or USD 0.6-1 billion annually during 2020-24, compared with USD 4-5 billion in annual imports, equivalent to 0.7-1.1 per cent of total imports, "with over 80 per cent sourced from China for critical components like 4G/5G antennas and signal processors," the report highlighted.

Supply Chain and Fiscal Challenges

TANE manufacturing depends on a globally interconnected supply chain, with regions specialising in key components; for instance, Indian 5G base stations may integrate Taiwanese chipsets, Japanese optical transceivers and US-designed IP cores, making the sector vulnerable to disruptions in any one market.

At the same time, the Indian companies making generic TANE equipment face up to 26 per cent higher fiscal disability compared with their global peers in high-value-added telecom manufacturing. Further, "the disability rises to 29 per cent in product categories where buyer's credit is available against imports for an extended period," the report said.

Additionally, equipment manufacturing remains concentrated in low-value assembly, with domestic value addition often below 20 per cent. At the same time, the government has taken several initiatives such as the Production Linked Incentive scheme to support the sector.

The Path to Growth

As per NITI Aayog, similar while continued supportive measures could raise telecom and network equipment's GDP contribution to 1-1.5 per cent, create 500,000 skilled jobs and position India as a USD 50 billion export hub by 2035, turning existing vulnerabilities into a platform for global leadership.

However, "Robust government intervention will go a long way in catalysing domestic manufacturing, aligning with NTP25's 150 per cent output surge and 50 per cent import substitution goals." (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)