India is preparing a new manufacturing incentive programme for the telecom sector with a proposed outlay of ₹6,000–7,000 crore, aimed at moving domestic production beyond final assembly and into telecom components and deeper parts of the supply chain. The proposal, being prepared by the Department of Telecommunications (DoT), is under consideration by the Finance Ministry and is intended to succeed the existing telecom Production Linked Incentive (PLI) programme as it approaches its March 2027 end date.
The proposed five-year programme could target about ₹3 trillion in cumulative sales, ₹1.5 trillion in additional exports and roughly 9,000 direct jobs, according to people familiar with the proposal cited by Mint. The shift is significant because India’s first telecom PLI scheme helped establish domestic manufacturing but left substantial dependence on imported components. The next phase is therefore designed to encourage companies to manufacture more of the parts that go inside telecom equipment rather than concentrating primarily on assembling finished products.
Key takeaways
- India is considering a new ₹6,000–7,000 crore telecom manufacturing incentive programme.
- The proposal is designed to succeed the existing telecom PLI scheme, which runs through March 2027.
- The new programme would focus more heavily on components and backward integration.
- Proposed five-year targets include ₹3 trillion in sales and ₹1.5 trillion in additional exports.
- About 9,000 direct jobs could be created under the proposed programme.
- The existing telecom PLI had a ₹12,195 crore outlay.
- As of November 2025, 42 companies had collectively invested ₹4,789 crore and generated ₹1.01 trillion in sales under the existing scheme.
- The existing programme has had uneven participation, with 19 of 42 approved companies failing to claim or receive incentives as of November 2025.
- Industry representatives want lower investment thresholds and more flexible milestones for MSMEs.
- The new programme could strengthen India’s domestic 4G, 5G, optical, networking and future 6G equipment supply chains.
India is redesigning its telecom manufacturing strategy
India’s first telecom PLI scheme was built around a straightforward objective: encourage companies to manufacture telecom and networking products inside the country.
The programme was approved in 2021 with a projected outlay of ₹12,195 crore.
It provided financial incentives linked to incremental sales from products manufactured in India.
The policy helped bring both Indian and multinational companies into domestic telecom manufacturing, covering areas such as network equipment, routers, switches, optical fibre and other networking products.
But the government increasingly sees a weakness in the model.
Manufacturing a finished telecom product in India does not necessarily mean that most of its underlying value is created in India.
A router, radio unit or transmission system can be assembled domestically while critical chips, modules, printed circuit boards, optical components and other parts are imported.
The proposed successor programme is intended to address that gap.
The new scheme would move deeper into the supply chain
The central change is the move from assembly toward component manufacturing.
Mint reported that the proposed ₹6,000–7,000 crore programme would focus on deeper localization and backward integration. The five-year proposal is targeting ₹3 trillion in sales, ₹1.5 trillion in additional exports and about 9,000 direct jobs.
Backward integration means manufacturers begin producing more of the components and subassemblies that they previously purchased from suppliers.
For India’s telecom industry, that could include areas such as:
- Printed circuit boards
- Radio-frequency components
- Optical and photonics components
- Power amplifiers
- Oscillators
- Network modules
- Fibre-optic equipment
- Semiconductor-linked components
- Other critical subassemblies
The objective is not simply to increase the number of products carrying a “Made in India” label.
It is to increase the amount of economic value actually generated inside India.
Why component manufacturing matters
Components are often where the highest levels of technological expertise and supply-chain control reside.
A country can have large electronics assembly plants without having a strong domestic electronics ecosystem.
That creates vulnerability when international supply chains are disrupted.
The telecom industry learned this during the global semiconductor shortage, when companies faced difficulties obtaining chips and other critical components.
For India, the problem is particularly important because telecom networks are strategically significant infrastructure.
Mobile networks, broadband systems, optical networks and data transmission equipment support financial services, government systems, businesses and consumers.
A deeper domestic supplier base could therefore improve both economic resilience and strategic autonomy.
The existing PLI scheme produced substantial growth
The first programme has not been unsuccessful.
Government data submitted to Parliament showed that, as of November 30, 2025, the 42 approved beneficiaries had collectively invested ₹4,789 crore and generated ₹1,01,109 crore in sales, including ₹21,033 crore of exports. Employment reached 29,446.
The Economic Survey also highlighted the progress of the telecom PLI programme, noting more than ₹4,700 crore of investment, more than ₹1 lakh crore of sales and around ₹21,000 crore of exports.
That gives the government a foundation on which to build.
The challenge is that the investment and sales generated so far are not evenly distributed across participants, and component localization remains an important weakness.
The new programme is therefore less about abandoning the previous strategy and more about moving to the next stage.
Participation has been uneven
The existing scheme has also exposed some problems with India’s PLI model.
A December 2025 government response said that average domestic value addition across products manufactured under the telecom PLI was about 27.8%.
The same response said 23 of the 42 approved companies had claimed incentives as of October 31, 2025, while 19 of the 42 companies had failed to meet their annual production targets for 2024–25.
A separate January 2026 parliamentary response said 16 companies had missed investment targets as of March 31, 2025.
The government attributed this partly to the structure of the telecom equipment market.
Unlike consumer electronics, telecom equipment is largely sold business-to-business.
There are only a limited number of major telecom operators, and they make purchasing decisions based on price, technology, reliability and commercial considerations.
That means simply giving manufacturers an incentive does not guarantee that operators will buy their products.
Telecom companies need customers, not just subsidies
This is one of the biggest lessons from the first PLI programme.
A manufacturing company can build a factory because a government incentive exists.
But if telecom operators do not place sufficient orders, the factory may not operate at the scale required to justify the investment.
This is especially challenging for smaller manufacturers.
According to industry representatives cited by Mint, some MSMEs struggled because of component shortages and the large amount of working capital needed to withstand supply-chain disruptions. Industry groups have called for separate lower investment thresholds and more flexible milestone-based incentives for smaller companies.
That could become a major design issue for the successor scheme.
A large company can absorb a temporary production slowdown more easily than a small component manufacturer.
If India wants to develop a broad domestic supplier network, the incentive structure may need to recognize that difference.
The proposed scheme could be smaller but more targeted
At ₹6,000–7,000 crore, the proposed programme would have a lower headline outlay than the existing ₹12,195 crore telecom PLI.
That does not necessarily mean the government is reducing its ambition.
Instead, the strategy appears to be becoming more targeted.
The first programme was designed to establish domestic production of finished telecom equipment.
The next programme could concentrate government support on areas where the market has failed to create sufficient domestic capacity.
That is potentially more efficient.
Rather than subsidizing every stage of the production chain, the government could focus incentives on components that are strategically important but difficult or expensive to manufacture in India.
India still faces a cost disadvantage
Component manufacturing is more difficult than final assembly.
NITI Aayog has previously highlighted cost disadvantages in India’s electronics manufacturing ecosystem compared with China.
PRS, citing NITI Aayog, said the estimated cumulative cost disadvantage was around 10–14% for assembly and 14–18% for component manufacturing compared with China. Factors include tariffs and material costs, logistics and financing costs.
This explains why government incentives alone may not be enough.
If Indian manufacturers face significantly higher input costs, they may struggle to compete internationally even after receiving a production incentive.
The ecosystem therefore needs improvements in several areas simultaneously.
These include:
- Competitive electricity and logistics costs
- Faster customs and regulatory processes
- Reliable component supply
- Access to affordable capital
- Skilled workers
- Semiconductor availability
- Strong domestic demand
- Research and development support
- Easier technology transfer
Exports are a major part of the strategy
The proposed programme’s ₹1.5 trillion export target is particularly important.
India wants telecom manufacturing to become an export industry rather than one primarily serving domestic operators.
The country has already made progress.
The existing PLI scheme has supported companies exporting products including telecom networking equipment and optical products.
Nokia, Tejas Networks and other manufacturers have developed export-oriented production capabilities in India, while global contract manufacturers also participate in the ecosystem.
A deeper component base could make these exports more competitive.
If components can be sourced domestically, manufacturers may reduce lead times and supply-chain risks while increasing the share of value captured in India.
The programme could support India’s 5G and 6G ambitions
Telecom manufacturing is becoming increasingly important as networks evolve.
India has already deployed large-scale 5G infrastructure and is beginning to develop technologies for future 6G networks.
The government’s Bharat 6G Vision and related research programmes aim to position India as a contributor to future telecom standards and technologies.
A strong domestic manufacturing ecosystem would complement that effort.
India would ideally like to develop not just telecom equipment but also intellectual property, standards, software and components.
That could allow Indian companies to participate higher up the technology chain.
The proposed manufacturing programme could therefore work alongside research and development initiatives rather than operating in isolation.
Telecom manufacturing is becoming a strategic issue
Geopolitical tensions have changed how countries view telecom equipment.
Network infrastructure is no longer treated purely as commercial hardware.
Governments increasingly consider telecom supply chains a matter of national security.
That has created opportunities for countries that can offer trusted alternatives to concentrated supply chains.
India wants to position itself as one of those alternatives.
A domestic ecosystem could also help Indian manufacturers participate in global supply chains where customers are looking to diversify production beyond China.
The opportunity is especially significant for companies that can demonstrate internationally competitive quality and reliability.
The new scheme could benefit Indian electronics manufacturers
A component-focused programme could create opportunities across India’s electronics manufacturing industry.
Large electronics manufacturing services companies could use the incentives to move further into telecom modules.
Specialized component manufacturers could establish new production lines.
Indian engineering companies could develop domestic designs.
Semiconductor and photonics businesses could find new customers within the telecom ecosystem.
This is where the multiplier effect of the programme could become more important than the direct government payout.
One telecom equipment factory can support an ecosystem of suppliers, logistics providers, testing companies and engineering firms.
Dixon, Tejas and other manufacturers could be affected
Companies already operating in India’s electronics and telecom manufacturing ecosystem are likely to watch the successor programme closely.
The existing PLI scheme includes companies such as Tejas Networks, VVDN Technologies, Nokia Solutions and Networks India, Jabil, Flex and Dixon, among others.
The next scheme’s focus on components could particularly benefit companies pursuing backward integration.
However, no company should be treated as a confirmed beneficiary until the government announces the final eligibility rules.
The programme’s final product categories, investment thresholds, incentive rates and localization requirements will determine which businesses gain the most.
The timeline is not yet final
The current telecom PLI programme is scheduled to run until March 2027.
The government therefore has a clear reason to provide visibility on the successor programme before companies make new investment decisions.
Moneycontrol reported in September that the government was already working on a successor programme and that the proposal had received in-principle approval on the expenditure side, while further consideration by the Expenditure Finance Committee and Cabinet approval remained necessary.
The October reports indicate that the Finance Ministry is reviewing a proposal with a ₹6,000–7,000 crore outlay.
The final structure, however, is not yet official.
That distinction matters.
The proposed programme should not be described as an approved ₹7,000 crore scheme.
It remains a policy proposal under government consideration.
What could make the second phase more successful?
The first lesson is that incentives should be connected to actual market demand.
Companies should not receive support simply for creating nominal capacity.
Production, sales, exports, domestic value addition and technological development should all matter.
The second lesson is that MSMEs need a workable entry point.
Small component manufacturers can play an important role in building the supply chain, but they may not be able to meet the same investment thresholds as large equipment manufacturers.
The third lesson is that R&D needs to be part of the strategy.
India cannot become a global telecom manufacturing hub if domestic companies remain dependent on foreign designs and imported critical components.
Existing telecom PLI vs proposed successor
| Metric | Existing telecom PLI | Proposed successor |
|---|---|---|
| Government outlay | ₹12,195 crore | ₹6,000–7,000 crore |
| Main focus | Telecom/networking products | Deeper component manufacturing |
| Duration | Through March 2027 | Proposed 5 years |
| Proposed sales target | — | ₹3 trillion |
| Proposed additional exports | — | ₹1.5 trillion |
| Proposed direct jobs | — | ~9,000 |
| Strategic objective | Establish domestic manufacturing | Increase local value addition and backward integration |
The successor programme’s figures are reported proposal targets and are not final government-approved terms.
The Bigger Picture
India’s next telecom manufacturing incentive programme represents a change in strategy rather than simply another subsidy scheme. The first PLI programme helped establish domestic production and generated more than ₹1 lakh crore in sales, but a significant share of critical components is still imported. The proposed ₹6,000–7,000 crore successor programme is designed to address that structural weakness by pushing manufacturers deeper into the supply chain.
The real test will be whether the government can combine financial incentives with strong domestic demand, lower manufacturing costs, R&D support and export opportunities. If it succeeds, India could move from assembling telecom equipment toward controlling a larger share of the technology and component ecosystem behind 4G, 5G and eventually 6G networks.
FAQs
How much will India’s new telecom manufacturing scheme cost?
The government is considering an outlay of approximately ₹6,000–7,000 crore for the proposed successor programme. The amount is still under consideration and has not been formally approved.
When will the new telecom scheme begin?
The existing telecom PLI programme runs through March 2027. The government is working on a successor that could be introduced in the following financial year, subject to the remaining approval process.
What is different about the new scheme?
The proposed programme would focus more heavily on telecom components and backward integration, rather than primarily incentivizing production or assembly of finished telecom equipment.
How successful has India’s existing telecom PLI been?
As of November 30, 2025, 42 approved companies had invested ₹4,789 crore, generated ₹1,01,109 crore in sales and created 29,446 jobs, according to the government. Exports stood at ₹21,033 crore.
Why does India need a component-focused scheme?
India still imports many critical telecom components. A stronger domestic component ecosystem could increase local value addition, reduce supply-chain dependence and make Indian telecom equipment more competitive in export markets.
Looking Ahead
The next important milestone will be the government’s final approval of the successor programme, including its exact budget, eligible products, incentive rates, investment thresholds and localization requirements. Those details will determine whether the new scheme successfully addresses the weaknesses identified in the first telecom PLI.
If the policy succeeds in attracting component makers alongside finished-equipment manufacturers, India could build a much deeper telecom supply chain over the next five years. That would strengthen domestic network resilience while giving Indian companies a better chance of becoming global suppliers of 5G, optical networking and future 6G equipment.
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