TRAI Says Making Telecom Gear in India is 12-13% Costlier than in China

The Telecom Regulatory Authority of India (TRAI), in a recent report, said that manufacturing telecom gear in India is 12-13% more expensive than in China. This is even after including the incentives that the companies get from the Production Linked Incentive (PLI) scheme. Even in Vietnam, it is 3% cheaper to manufacture the same telecom equipment compared to India. If the PLI benefits weren’t considered, then the relative cost difference would shoot up by another 4% where India would be at the expensive end.

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There are multiple reasons why it is costlier to manufacture the same equipment in India than in China or Vietnam. Firstly, compared to India, these countries have a much better and developed infrastructure for manufacturing and smooth supply chains for components. Then, the other countries also offer additional incentives such as subsidies and interest subvention.

Read More – TRAI Gives Recommendations for Improving Connectivity in North East

How Vietnam and China Enable Cheaper Manufacturing of Telecom Equipment than India?

TRAI studied the policies for the Vietnam market to understand how they are able to manufacture the equipment at a lower cost than in India. In Vietnam, many goods are exempt from import taxes. These include the ones that are imported for re-export and then the materials and equipment used for the production of export goods are also exempted. Further, any raw material or component that can’t be produced locally is also exempted from import duties. Further, there are corporate tax benefits as well as credit incentives. Even China has policies in place that encourage more local production with several benefits.