India’s telecom and network equipment (TANE) sector has significant growth potential, but heavy dependence on imports, particularly from China, highlights the need for stronger policy support to expand domestic manufacturing and exports, according to a NITI Aayog report.

The report highlighted that the sector could help advance the National Telecom Policy 2025 (NTP-25) goals of universal connectivity, doubling its contribution to GDP and achieving $1 trillion in exports by 2030. However, large trade imbalances underline the need for targeted policy intervention.

India’s TANE exports stood at only $0.6-1 billion annually during 2020-24, accounting for 0.2-0.3% of the country’s total exports. In comparison, annual imports were much higher at $4-5 billion, representing 0.7-1.1% of total imports. More than 80% of imports of critical components, including 4G/5G antennas and signal processors, are sourced from China, the report said.

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Such dependence leaves the sector exposed to supply chain disruptions, geopolitical risks and currency fluctuations, while also limiting progress towards greater domestic self-reliance.

India’s TANE sector is expected to benefit from the continued rollout of 5G, rising data consumption, broadband expansion, smart city applications, industrial automation, IoT adoption, cloud computing and growing enterprise connectivity.

The domestic TANE market was estimated at around $25 billion in FY25 and is projected to nearly double to about $50 billion by FY32, implying a compound annual growth rate of 10%.

Globally, the telecom equipment market is expected to expand from around $498 billion in FY23 to $714 billion by FY30, indicating substantial export opportunities for Indian manufacturers.

The report noted that 5G subscriptions globally are projected to rise from 2.27 billion in 2024 to 6.35 billion by 2030, while monthly mobile data traffic is expected to increase from 124 exabytes to 303 exabytes. IoT connections are projected to rise from 13.2 billion to 34.7 billion over the same period.

Import dependence and low value addition

Despite strong domestic demand, India continues to depend heavily on imports for network infrastructure and critical components. While the Production Linked Incentive (PLI) scheme has helped expand manufacturing in areas such as optical fibre cables, customer premises equipment, routers and switches, much of the sector remains focused on assembly.

Domestic value addition in several products remains low, with localisation levels for some telecom equipment below 15%. Manufacturers continue to rely on imported semiconductors, RF modules, integrated circuits, processors and other critical components.

The report also pointed to a significant cost disadvantage for Indian manufacturers. Generic TANE equipment makers face up to 26% higher fiscal disability than global peers in high-value-added telecom manufacturing. This rises to 29% in product categories where imported equipment benefits from extended buyer's credit, it said.

The report identified several factors limiting India's ability to compete globally. Apart from high import dependence and low domestic value addition, Indian manufacturers face limited access to the domestic market.

Nearly 98% of telecom equipment demand comes from private telecom service providers, which largely prefer established global original equipment manufacturers because of their technological maturity, scalability and certification standards.

Lower profitability and weaker economies of scale also constrain Indian companies' ability to invest in innovation and expand capacity. Skill shortages and lower labour productivity remain additional challenges.

NITI Aayog said deeper localisation of component manufacturing could encourage companies to gradually increase the domestic share of their bill of materials. The process could initially focus on non-semiconductor, plastic, insulation and electro-mechanical components before moving towards higher-value components.

The report also recommended encouraging joint ventures between global original equipment manufacturers and Indian companies to facilitate technology transfer and build domestic capabilities. Industrial clusters could further help manufacturers achieve scale, integrate suppliers and strengthen innovation.

India should also focus on export-oriented segments such as antennas, remote radio heads, baseband units, optical fibre cables and microwave equipment. Global imports of antennas, remote radio heads and baseband units alone exceeded $219 billion in 2024, while India's exports in these categories were below $1 billion, pointing to a significant untapped opportunity.

The report also called for stronger testing and certification infrastructure, along with greater industry-academia collaboration for skill development and innovation.

The TANE sector has already benefited from measures such as the PLI scheme, and continued policy support could raise its contribution to GDP to 1-1.5%, create 500,000 skilled jobs and position India as a $50 billion export hub by 2035, according to NITI Aayog.

The report said stronger government intervention could help accelerate domestic manufacturing and support NTP-25's targets of a 150% increase in output and 50% import substitution, enabling India to shift from assembly-led production towards deeper localisation, technology development and export-oriented manufacturing.