Domestic companies oppose inclusion of multinational PLI beneficiaries in Class

Time of India

3 days ago

NEW DELHI: Homegrown telecom gear makers have pushed back against the Central government's notification, which qualifies products manufactured under the production-linked incentive (PLI) scheme as Class 2, potentially allowing global vendors such as
Ericsson
and
Nokia
to bid for government-driven projects.
The
Voice
of Indian Communication Technology Enterprises (VoICE) argued that qualification as Class 2 should only be appropriate for products and vendors who have full control over design and manufacturing, in line with the Design-Led
PLI Scheme
.
'It is concerning that foreign OEMs have long lobbied for Class-II status simply by outsourcing assembly to a PLI awardee in India. We strongly oppose such interpretations, as they dilute the core objective of the PLI scheme—namely, to attract investment, generate high-value employment, and promote genuine local value addition,' RK Bhatnagar, director-general of VoICE, said in a letter to the Department of Telecommunications (DoT).
ETTelecom
has reviewed a copy of the letter dated July 13, 2025.
VoICE represents domestic vendors such as
HFCL
, STL, Lekha Wireless, Tidal Wave, Tata Consultancy Services (TCS), Centre for Development of Telematics (C-DoT), Amantya Technologies, VVDN, and Coral Telecom, amongst others.
In many cases, it said, multinational OEMs benefitting from PLI do not source mechanical or electromechanical components locally, and instead, continue to rely on their global supply chains while 'leveraging the PLI platform to gain market access and Class-II recognition—without contributing meaningfully to domestic capability or economic value'.
The latest notification, dated October 21, 2024, outlines the minimum local content requirement, ranging from 50% to 65%, and defines the ceiling for local content, from 15% for low-IP products to 55% for high-IP, software-centric products.
VoICE also highlighted that current procurement value-addition metrics in many sectors overemphasise 'local manufacturing or assembly and undervalue domestic IPR contributions', recommending to the DoT that there is an urgent need to revise 'public procurement metrics to explicitly recognise and reward indigenous innovation'.
Notably, the government has disbursed incentives of ₹331.86 crore to 18 out of 42 beneficiaries under the telecom PLI scheme, Minister of State for Communications Chandra Sekhar Pemmasani informed Lok Sabha in December last year.
Jabil Circuit India led the chart of beneficiary companies with a total incentive of ₹78.62 crore. It is followed by Nokia Solutions and Networks India, which has received incentives of (₹46.92 crore), Tejas Networks (₹32.66 crore), Flextronics Technologies India (₹30.6 crore), Commscope India (₹25.95 crore), NeoLync Tele Communications (₹21.79 crore), Rising Stars Hi-Tech (₹20.33 crore).
The Delhi-based grouping also sought the inclusion of products such as 4G and 5G radio and core networks, IP-MPLS routers, and DWDM/OTN systems under the Class 1 category, considering these equipments are now being designed and developed indigenously.
VoICE further highlighted that hardware design and software copyright are two important aspects of the overall design cost, noting that their ownership with the Indian entity is a very important criterion to qualify as local content and this should, if required, be strengthened to avoid misuse. This suggestion has, however, been sharply struck down by cloud and software giants.
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'We recommend including the definition, if required of domestic IPR, IPR ownership certificate and royalty outflow and inclusion of mandatory disclosures by bidders with list of IPRs used in the product (with ownership proof), R&D centre details with manpower and investment in India, support infrastructure locations and capabilities and details of any recurring royalties or brand-related payments,' Bhatnagar said in the letter.
By contrast, technology giants such as Amazon Web Services (AWS), Microsoft, OpenAI, Oracle, Salesforce, and SAP, among others, urged the telecom department to exclude software products and services from
local content requirements
under the Public Procurement (Preference to Make in India) policy, 2017, citing ambiguity in determining local content and impact on investments and job creation.
'Given the inherently global and interconnected nature of software development and deployment, accurately defining and measuring local content presents unique and significant complexities. Accordingly, we strongly recommend excluding software products and services from the scope of local content requirements for participation in public procurement,' Venkatesh Krishnamoorthy, country manager (India), BSA, said in a letter dated July 10, 2025, to Ranjan.
The US-based industry grouping argued that software solutions involve global teams, outsourced providers split across geographies, and third-party licensed code, which makes local content calculation 'difficult or impossible'.
'Failing to consider the specific nature of software products and services and how they are developed and simply treating them as other kinds of goods or services creates unnecessary difficulties in the procurement process for both buyers and sellers of software products and services,' Krishnamoorthy said in the letter.