Ericsson wants prior investments linked to PLI scheme eligibility

Ericsson India has made it clear that the draft production-linked incentive (PLI) scheme for telecom gear makers, which replicates the rules for mobile devices, will not work for them, as the scheme does not give credit to the substantial investment that the European telecom gear maker has made in India since 1994.

Nitin Bansal, managing director of Ericsson India, and head, networks, for southeast Asia, Oceania and India, said: “We already export from India and can surely scale up. In fact, we export 5G radios from India to Australia and southeast Asia even though currently they are not required here. Also, 95 per cent of the equipment that we sell to telcos in India are manufactured here. We have been investing in manufacturing in India since 1994 and we want this investment to be considered for PLI eligibility — and not just the new incremental investment made from the day the scheme is implemented.”

Ericsson’s stand is significant as the draft PLI scheme stipulates that global companies have to make an incremental investment of Rs 600 crore over four years to be eligible for it. 

A similar issue had cropped up in the mobile device PLI scheme, too, when a leading Korean company told the government that the massive investments it had recently made to set up a 110 million-plus phone manufacturing unit in India should be considered for eligibility. Some had also complained that the scheme was tailor-made for Apple Inc, which was looking at shifting production from China to India.

As in the mobile device PLI scheme, the scheme for telecom gear makers also offers incentives ranging from 4 per cent to 6 per cent on the production value to enable India to become competitive vis-a-vis China and Vietnam. However, the draft PLI scheme has been stuck because of complaints by telcos that they were not in the participation process.

Responding to the lack of clarity on 5G rollout in India, especially as its auction has now been postponed, Bansal said: “It is important that 5G be brought to reality in India. There are already 100 live 5G networks globally. We should have been the frontrunner, but there have been unfortunate delays.”

Bansal said that while 5G can be operated with even 60 MHz of spectrum, to be effective, Ericsson recommends a minimum of 100 MHz in the 3.5 GHz band and 400 MHz in the millimeter band. But the company was all set to launch 5G networks in India, he said.  

“We are ready. Our networks are already 5G-enabled. The 5G radios are manufactured in India, so we have to plug in these radios which will work on the new bands — and we are good to go. And telcos already have the towers.”

According to Ericsson, nationwide or circle-wise 5G rollout could be based on the 3.5 GHz band, with spectrum sharing of the 4G bands like 1800, 2100 and 2300 MHZ which will provide the requisite coverage. “Like elsewhere in the world, the 3500 MHz band will be generally used for mobile broadband while the millimeter band will be used for fixed wireless broadband with high speeds which are localised — such as in an institute or a dense commercial area. The milliemeter band will also enable machine-to-machine usage,” Bansal added.

But what of global apprehensions that the move towards open radio access network (O-RAN), which is based on open-source software and disaggregates software and hardware to give telcos more choice, will adversely impact the business of telecom gear makers? 

“It will not impact our business at all,” replied Bansal “Our focus is on offering the telcos the best total cost of ownership combined with the best product performance. Based on our current analysis, focused hardware (buying from one vendor) cost is much lower than disaggregating software and hardware. But that might change. So we are very much a part of the O-RAN alliance and our R&D is working on both streams to fine-tune our products.”