The South Korean electronics major, Samsung Electronics, is likely to apply for the Rs 12,195-crore production-linked incentive (PLI) scheme to manufacture 4G and 5G gear locally.
Samsung expects to supply telecom gear to Reliance Jio, its only telco customer in India so far, besides other clients across the globe from its factory that is expected to come up in Uttar Pradesh, a company official told Economic Times. Samsung would then European telecom equipment vendors Nokia and Ericsson and other global manufacturers such as Cisco, Jabil, Flex, and Foxconn, in applying for the PLI scheme that seeks to boost local production of telecom equipment for sales both in India and overseas and reduce imports.
The lower limit for investment has been set at Rs 100 Crore for any big company getting approved under the scheme to set up the production lines and machinery to avail benefits. For MSMEs, the minimum investment threshold is Rs 10 crore.
The scheme is set to offer incentives to the companies that are selected for incremental production over the base year. Commencement date of the scheme is April 1 and the government expects it to lead to incremental production of approximately Rs 2.4 lakh crore, with exports of approximately Rs 1.95 lakh crore over five years.
According to an ET report, “the scheme will cover core and transmission equipment, 4G/5G next-generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers, etc.”
“Samsung is looking to have diversified manufacturing given that it has recently won 5G business globally. Jio, however, is its most critical and largest client globally,” the official said.
The Korean tech giant’s exclusive tie-up with Reliance Jio on 4G has already ended and the leading Indian telco has stressed its intention of building everything related to 5G in India.
“They (Samsung) want to support Jio’s network from a local manufacturing unit since there is a push for make in India,” a senior Jio executive added.
Mukesh Ambani-led Jio, on its part, is still discussion phase and looking for manufacturing partnerships for its own 5G equipment in the country and it is expected to give orders to manufacturers with “tier-1” facilities located within India.
“Jio’s own design will be given to mass manufacturers. The talks are at an advanced level since the deployment will be done quickly after the 5G spectrum auction later this year,” the Jio executive said. “Jio will not procure anything from outside. Everything will be made in India.”
BofA Securities, Inc. (previously Bank of America Merrill Lynch) in a recent report, said that Jio may depend on its 4G gear partner Samsung so that its 5G equipment is backward compatible. “If Samsung starts assembling/manufacturing 5G massive MIMO/RU in India, then Jio’s entire 5G stack, in theory, would be ‘Made in India’,” said the report.
Final guidelines of the PLI scheme are being awaited by the companies that have applied, which will specify how many global and local companies would be selected.