India’s growing production powerhouse

India’s growing production powerhouse

Issues between the United States and China continue, however other countries can be forgiven for wondering why they should be considered as helpless bystanders as the worlds two main superpowers go head-to-head in a battle over which of them should attain or retain dominance in the global telecommunications business.

Perhaps one of the most expected responses is that of India. The country will be exercising its leadership and also its dominance in its 1.3 billion consumer market.

To avoid finding itself on the wrong side as the tech trade war heats up, the Indian government says it is planning to motivate the big telecoms equipment manufacturers to move towards making all of the telecoms equipment that they provide for India’s giant telecoms operators inside the country. This will mean security of supply. Critics also say that another motivation is to lessen the possibility of spying by foreign intelligence services.

There is currently a mandate to buy local telecoms equipment in the case of BSNL, which is a state-run company, however international vendors point out that expanding local production would not make sense just to service one specific network. They would require further incentives.

At the moment the likes of Nokia and Ericsson are building telecom equipment in India for the Indian market however the amount of local content going into the finished product is only around 40%.

So mainly for reasons of security of supply in a broken telecoms world, the government says it wants to push that proportion to 100%. This may take time, of course, however India represents a vast and increasing market so it must be confident that the big players at least, will be content to display ‘made 100% in India’ stickers on their finished boxes in due course. One of these main vendors will include Huawei.

India’s Department of Telecommunications (DoT) is actually scheduled to meet with the vendors, to discuss how Indian telecoms equipment manufacturing in India can be expanded.

In the meantime, India is already launching major initiatives to boost electronics manufacturing including components distant from mobile phones. This year alone, it has approved three separate schemes – the Production Link Incentive Scheme for large-scale electronic manufacturing; the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors, and the Modified Electronics Manufacturing Clusters Scheme. The three schemes offer either cash incentives for sales goods that are manufactured in India; capital expenditure subsidy for electronic goods; and in the case of EMC 2.0, support for the development of “common facilities and amenities,” such as ready-built factory sheds for attracting major global electronics manufacturers.

It is predicted that these three schemes could result in smartphone and component production worth an amount of US$133 billion by 2025 and will more than likely attract global players like Samsung. Apple suppliers Foxconn and Wistron have already increased local production, due to India’s huge market of 1.3 billion people.

Globalisation rollback will not be going in one direction. The European Union has also announced that it is going full steam ahead on digital service provider platform regulations. This includes clipping the wings of Google, Facebook and Amazon. It has been on the agenda for several years and the United States government has not been slow to voice its opposition to such developments. Now the European Union has launched two consultations. The first is to update the e-commerce directive from 2000, and the other suggests new competition regulations to prevent the big digital platforms acting as gatekeepers to stymie European entrants.