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Policy of Make in India for Network/IT equipments, how much it is impacting the OEMs/System Integrators based in India

Overview of the Make in India Policy

Overview of the Make in India Policy
The Make in India initiative, launched in 2014 by the Government of India, aims to position the country as a global manufacturing hub by promoting domestic production, attracting foreign investments, and fostering self-reliance (Atmanirbhar Bharat). In the telecom and IT sector, which includes network and IT equipment, the policy is implemented through the Public Procurement (Preference to Make in India) Order, 2017 (PPP-MII), issued by the Department for Promotion of Industry and Internal Trade (DPIIT) and revised multiple times (e.g., June 2020, September 2020, and July 2024). The Department of Telecommunications (DoT) oversees sector-specific guidelines via a notification dated August 29, 2018, which mandates preferences for locally manufactured products in government procurement to enhance income, employment, and competitiveness.
The policy focuses on local value addition to discourage imports and build a domestic ecosystem. For network and IT equipment, it covers items like routers, ethernet switches, media gateways, customer premises equipment (CPE), GPON equipment, satellite phones, optical fiber and cables, telecom batteries, and more—totaling 36 products as per recent guidelines. Procurement by central government entities prioritizes suppliers based on local content levels, with exclusions for imported components, royalties paid abroad, repackaged goods, and certain costs like transportation or after-sales support.
Key Requirements for Local Content in Network/IT Equipment
Local content is defined as the value added in India, calculated as:
(Sale price – Value of imported content) × 100 / Sale price (excluding net domestic indirect taxes).
Up to 10% of costs for assembly, integration, and testing can count toward local content, and design elements qualify if intellectual property rights (for hardware) or copyrights (for software) reside in India.
For the 36 specified products, a minimum of 50% local content is mandatory for eligibility in public procurement. Verification involves self-certification for tenders below INR 10 crore and audited certificates for larger ones. Notably, 5G equipment is currently excluded from these strict local sourcing rules, with periodic reviews planned. Recent DoT proposals (as of June 2025) suggest relaxing these to around 20% for some products due to India’s limited component ecosystem, as highlighted by reports from NITI Aayog, TRAI, and industry bodies like MAIT.
Related Schemes: Production Linked Incentive (PLI) for Telecom and Networking Products
Complementing PPP-MII, the PLI Scheme for Telecom and Networking Products, launched in 2021 by DoT with a total outlay of INR 12,195 crore over five years, incentivizes domestic manufacturing. It targets products like core transmission equipment, 4G/5G next-generation RAN, routers, switches, IoT access devices, and enterprise equipment.
• Eligibility: Open to MSMEs, non-MSMEs, Indian companies, and global firms. Applicants must meet minimum investment thresholds (e.g., INR 10 crore for MSMEs, INR 100 crore for non-MSMEs) and commit to incremental sales. As of 2022, 42 companies (including MSMEs like VVDN Technologies and global players like Nokia, Ericsson) were approved as beneficiaries.
• Benefits: Incentives range from 4-7% (higher for MSMEs and design-led manufacturing) on net incremental sales over the base year (2019-20), plus an extra 1% for design-led efforts. Up to 15% of committed investments can be allocated to R&D. The scheme has been extended to include design-led 5G equipment manufacturing.
• Role in Make in India: It boosts exports, attracts investments (projected over INR 1 lakh crore across sectors), and creates jobs by encouraging end-to-end manufacturing ecosystems.
Impact on OEMs and System Integrators Based in India
The Make in India policy, through PPP-MII and PLI, has had a mixed but largely positive impact on Indian Original Equipment Manufacturers (OEMs) and System Integrators (SIs) in the IT/network sector, driving growth while facing implementation challenges. Overall, it has spurred a 3-4x increase in telecom equipment production and exports since 2021, with investments exceeding INR 3,000 crore under PLI alone.
Positive Impacts
• Boost to Domestic Manufacturing and Investments: OEMs like Tejas Networks and HFCL have expanded local production of routers, switches, and fiber optics, benefiting from procurement preferences and PLI incentives. This has enabled scaling, R&D, and exports, positioning India as a hub for global OEMs (e.g., Nokia and Ericsson setting up facilities). SIs, such as those in BharatNet projects, integrate local equipment, fostering partnerships and reducing import dependence.
• Job Creation and Ecosystem Development: The policy has created over 17,000 jobs in telecom manufacturing and encouraged supply chain localization, benefiting MSME OEMs and SIs through vendor development. PLI has attracted global OEMs to participate in design-led manufacturing, enhancing technology transfer.
• Market Access and Competitiveness: Preferences in government tenders (e.g., for USOF-funded projects like BSNL’s 4G) give Indian OEMs/SIs a competitive edge, with local content mandates pushing innovation and cost efficiencies.
Challenges and Negative Impacts
• Inconsistent Implementation: Weak enforcement in projects like BharatNet has led to bypassing domestic procurement, favoring foreign products and limiting opportunities for MSME OEMs/SIs. This has restricted market access for smaller players, with large MNCs and EMS suppliers capturing most benefits. Inconsistencies undermine Make in India’s goals of innovation and self-reliance, hindering indigenous capacity building.
• Proposed Relaxations: DoT’s June 2025 plan to lower local content thresholds to 20% could dilute incentives for localization, allowing “back-door entry” for foreign OEMs and hurting domestic manufacturers’ competitiveness. Industry bodies like TEMA argue this would stall value addition growth and impact employment.
• Ecosystem Limitations: India’s nascent component supply chain makes achieving 50%+ local content challenging, leading to higher costs for OEMs/SIs and reliance on imports. Delays in policy updates and lack of certification agencies exacerbate these issues.
In summary, while the policy has significantly boosted the sector’s growth (e.g., telecom exports rising 4x), its impact on Indian OEMs and SIs is tempered by enforcement gaps and potential relaxations. Stronger accountability, such as a national certification agency and long-term procurement plans, could maximize benefits.

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