Indian Telecom Companies Raise Red Flag Against PLI Classification Rules

New Delhi, Jul 19 (KNN) Domestic telecommunications equipment manufacturers have formally challenged the Central government's recent notification regarding product classifications under the production-linked incentive scheme. 

The notification enables products manufactured under the PLI program to qualify as Class 2, potentially opening doors for international vendors to participate in government-led projects.

According to a report by ETTelecom, The Voice of Indian Communication Technology Enterprises has contested this classification in a letter to the Department of Telecommunications dated July 13, 2025. 

The industry body argues that Class 2 status should be reserved exclusively for products and vendors maintaining complete control over both design and manufacturing processes, consistent with the Design-Led PLI Scheme's original framework.

Director-General RK Bhatnagar expressed concerns that foreign original equipment manufacturers have pursued Class 2 status through assembly outsourcing arrangements with PLI beneficiaries in India. 

The organisation opposes such interpretations, asserting they undermine the PLI scheme's fundamental goals of attracting investment, creating high-value employment opportunities, and fostering genuine local value addition.

VoICE represents numerous domestic companies including HFCL, STL, Lekha Wireless, Tidal Wave, Tata Consultancy Services, Centre for Development of Telematics, Amantya Technologies, VVDN, and Coral Telecom. 

The association highlighted that multinational OEMs receiving PLI benefits frequently fail to source mechanical or electromechanical components domestically, instead maintaining reliance on global supply chains while utilising the PLI platform primarily for market access and Class 2 recognition.

The government's October 21, 2024 notification established minimum local content requirements ranging from 50 per cent to 65 per cent, with ceiling definitions spanning from 15 per cent for low-intellectual property products to 55 per cent for high-IP, software-focused products. 

The industry body criticised current procurement value-addition metrics across sectors for overemphasising local manufacturing and assembly while undervaluing domestic intellectual property contributions.

VoICE recommended urgent revisions to public procurement metrics to explicitly recognise and reward indigenous innovation efforts. 

The organisation advocated for including products such as 4G and 5G radio and core networks, IP-MPLS routers, and DWDM/OTN systems under the Class 1 category, citing their current indigenous design and development status.

(KNN Bureau)