Telecom department plans to relax local content requirements under Make in India policy

The
Department of Telecommunications
(DoT) plans to review its
public procurement policy
(PPP) with preference to the Make-in-India (MII) order issued in October last year, in a bid to incorporate more products and likely relax
local sourcing requirements
.
While issuing the guidelines for the PPP Make-in-India order last year, the DoT had identified 36 products that must have over 50% local value addition to be eligible for procurement by the Central government and its affiliated entities.
Since
5G products
were excluded from the list, the DoT had incorporated an enabling provision to review the products from time to time.
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As per the DoT's notice seeking stakeholders' comments, it proposes to review its PPP-MII order dated October 21, 2024, specifically for aspects concerning the list of products notified under the order, product-wise local content (LC) requirement including the ceiling of LC for design, conditions of inputs (including design) to be qualified as LC, and criteria for calculating LC for software products.
'Multiple reports (
NITI Aayog
, Trai, MAIT, PLI companies etc.) indicate that
India
's limited component ecosystem poses challenges in achieving 50–60% LC in electronic/telecom products. Recognising this constraint, the conditions for LC qualification also require a review,' the DoT notice said.
Currently, the list of products where the minimum LC has to be over 50% includes routers, ethernet switches, media gateways, customer premises equipment, GPON equipment, satellite phones and terminals, optical fibre and cable, and telecom batteries.
While tightening the norms and pushing Make-in-India, the government had excluded imported items sourced locally from resellers and distributors from the calculation of LC. Besides, royalties and technical charges paid out of India, and the supply of repackaged and refurbished goods were excluded from the calculation of LC.
In the case of public procurement, preference is given to class-1 suppliers. If a class-1 supplier is not able to supply, a class-2 supplier is given a chance.
All companies making products under the production-linked incentive (PLI) scheme for telecom equipment would be treated as class-2 suppliers. A class-1 supplier has to have 50% LC, while a class-2 supplier needs 20% LC.
'Any recommendations for the inclusion of new products or exclusion of existing ones must be substantiated with detailed justification, including verifiable data such as a list of major manufacturers, estimated LC value (%), annual production capacity, domestic sales and exports/imports (with figures), sales to public sector entities, etc.,' the notice added.
Stakeholders can send their comments within 30 days.

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South Korea's LGInnotek, and China's OFILM and Sunny Optical Technology are among the large global manufacturers of camera modules. The skills needed for assembly-line operations and manufacturing components are also different. A diploma holder or electronics/mechanical engineer will be ready for assembly operations after about 30 days of training. For component manufacturing, the same talent will have to be trained for up to six months to become familiar with additional manufacturing lines, industrial gases, contamination control, temperature, pressure and working in dust free, ultra-clean environments, among myriad things. Smartphone-centric assembly EMS in India has largely been mobile phone-centric," says CII's Sharma. 'It's like a 4x400 relay race—we've run the first lap, but the remaining three are even more critical." The first leg of India's relay was defined by contract manufacturing of smartphones. Companies such as Foxconn, Wistron, Dixon, and others became the backend for Apple, Xiaomi, OnePlus, RealMe and other brands, while Samsung also scaled up, setting up a large smartphone factory in Noida. PLI-led manufacturing—where the government gives sops between 4-6% on incremental sales—not only made the country self-reliant (largely in smartphones) but also helped scale up local makers such as Dixon Technologies, Optiemus Infracom, Syrma SGS Technology. It also attracted global companies, including iPhone makers Foxconn and Pegatron, and electronic components makers Jabil Circuit and others. But assembly is not manufacturing, and setting up a component ecosystem will help address that lacuna. 'Our value addition in electronics is only 10–15%," says Saurabh Agarwal, tax partner and manufacturing practice lead at EY India. 'It shows that because of PLI, India is among the largest assemblers of phones in the world. But a lot needs to be done to increase local value addition. A lot of critical components are being imported." Also, unlike in smartphones, in the non-mobile categories, which include televisions, air conditioners (ACs), washing machines, IT hardware, and industrial electronics, the volumes are way less compared to what China does and hence makers can't derive economies of scale. In smartphones, India has a better record with around 300 million units being made (read: assembled) and Apple also ramping up production here. However, India still heavily relies on imports for products such as laptops, desktops, other IT hardware and key parts of TVs and washing machines. 'IT hardware players didn't have to make in India to sell in India as import duties were nil to low. Laptop and desktop companies weren't in the same predicament as phone makers like Apple or Samsung," says CII's Sharma. Made in India? CII's Sharma sees design as the third lap of India's EMS relay—and the most ignored. 'You can't build a brand without design. And unless Indian companies invest in original product and component design, we'll never have a Samsung or a Panasonic," he says. This view is echoed by Gupta of Boult. The company reported revenue of ₹3 crore in 2017, its first year, and in 2024-25, clocked ₹750 crore. For manufacturing, it relies on imports of key parts such as chips, drivers, and LED screens. 'We've set up our own SMT (surface mount technology, which embeds chips on a printed circuit board) lines and source plastics and packaging domestically," says Gupta. 'But core manufacturing still depends on global suppliers," he adds. The final lap, CII's Sharma believes, is about building brands. And here, India has stumbled repeatedly. One of the reasons often cited by the industry is lack of volumes. Local brands cannot compete with cheaper imports and are forced out. Though, this is changing in some areas, like ACs. India now makes 22-25 million ACs a year, up from 9-10 million a decade back. 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For instance, when Intel set up its factory in Taiwan back in the 1980s, local company TSMC benefited and today it is the largest contract manufacturer of chips in the world. New opportunities India's next challenge lies in building a broader industrial base. Companies such as Syrma SGS, Boult and Optiemus are positioning themselves to tap new opportunities in telecom, automotive, and medical devices. Even Lenovo, a Chinese company, has expanded its Puducherry facility to accommodate server manufacturing—an indication that India's next manufacturing chapter is beginning to take shape. But experts warn against over-reliance on incentive schemes. 'Your business model must be viable on its own," Optiemus' Gupta says. 'We have passed the first baton," CII's Sharma says, referring to his relay analogy. 'If we fumble the next stages—building components, design, and brands—we'll never win the race."