Home-bred contract manufacturer Dixon has entered into agreement with Bharti Enterprises Ltd to form a joint venture (JV) to manufacture telecom and networking products like modems, routers, set top boxes, Internet of Things (IoT) devices for the telecom sector, including Airtel.
Dixon said that its wholly-owned subsidiary Dixon Electro Appliances Pvt Ltd or any firm identified by the two parties will be the joint venture entity, which will file necessary applications with the Ministry of Communications to avail benefits under the PLI Scheme of Government of India.
Post execution of mutually acceptable agreements by the parties, the JV Company will be 74 per cent owned by Dixon & 26 per cent owned by Bharti Enterprises, Dixon said in a regulatory filing.
“We are delighted and encouraged by the trust they have bestowed on Dixon for this collaboration. We see them as our ideal long-term strategic partner…we intend to leverage each other’s strengths to manufacture telecom and networking products,” CFO, Dixon Technologies Saurabh Gupta said in a joint statement.
Group Director, Bharti Enterprises Deven Khanna said that the telecommunications sector has played a pivotal role in facilitating growth of the economy and is a key enabler of digital connectivity and Digital India. “With Dixon’s excellent track record in the manufacturing industry & Bharti’s deep expertise in Telecom, this venture will be well positioned to be a key player in its space,” he added.
“This partnership will pave the way for other manufacturers to forge partnerships with telecom operators. Relying more on Indian players itself gives a message to the word India’s telecom manufacturing ecosystem is developing fast,” said Research Manager – Telecom & IoT at IDC, Yash Jethani.
“This is a very apt response to the emerging environment related to telecom network equipment. Airtel has unique strengths being one of the main telco in India and is uniquely placed to partner with a vendor and exploit the new incentives launched by the government as well as to de-risk it’s business. It is a beneficiary as both a user and a vendor,” said Mahesh Uppal, director at communications consulting firm ComFirst India.
ET previously reported that Airtel was in talks with local and multinational vendors to locally produce 5G gear and other wireline and wireless networking products. It plans to do its own R&D and in collaboration with local, US and Japanese firms.
In February, the Union cabinet approved incentives worth Rs12,195 crore for domestic manufacturing of telecom and networking equipment, seeking to cut the country’s massive dependence on imports of such gear.
The PLI scheme will reduce India’s imports of telecom equipment worth over Rs50,000 crore, communications, electronics and information technology minister Ravi Shankar Prasad had told reporters after the Cabinet’s decision.
ET recently reported that players like Samsung, Cisco Jabil, Flex and Foxconn, besides European telecom equipment vendors Nokia and Ericsson are planning to apply for the scheme of the Indian government aimed at boosting local production of telecom equipment and reducing imports.
These players are currently awaiting the final guidelines of the PLI scheme, which will specify how many global and local companies would be selected.
The scheme will cover core and transmission equipment, 4G/5G next generation radio access network and wireless equipment, access and customer premises equipment (CPE), Internet of things (IoT) access devices, other wireless equipment and enterprise equipment like switches, routers etc.
The scheme for telecom equipment will offer incentives to the selected companies for incremental production over the base year. It would be operational from April 1 and the government expects it to lead to incremental production of around Rs 2.4 lakh crore with exports of around Rs 1.95 lakh crore over five years.