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Source: The post is based on the article “Phone A Friend Friend-shoring is a chance for India to get deeply into telecom supply chains. But trade needs to be more open” published in The Times of India on 24th March 2023.
Syllabus: GS – 3: Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
Relevance: About telecom supply chains.
News: The International Telecommunication Union (ITU) has opened an area office and innovation centre in India. Further, India has also launched the domestic 6G test bed.
About telecom supply chains
China has a significant share in the supply chains of many products. Apart from that, Vietnam also has a significant presence in supply chains.
Apart from Asia, Mexico has the advantage of an FTA with both the US and Canada.
How India is improving its telecom supply chains?
India’s trustworthiness is in sync with the phenomenon of friend-shoring.
Note: Friend-shoring is a concept where supply chain relocation is influenced by similar values.
In addition to making rapid progress in key measures such as logistics and human capital, India’s trade policy has seen it join critical regional trade agreements such as RCEP and CPTPP.
On the manufacturing side, India has a) Production-linked Incentive (PLI) schemes, which incentivise companies through a subsidy to offset other disadvantages, b) States separately offer incentives to attract manufacturing investments.
What needs to be done to further improve telecom supply chains?
Leverage market: An industrial policy that encourages manufacturing is essential but the returns may be limited. For example, Taiwan’s technology investment in China was around 33% since 2012. Though the investment has plateaued, Taiwan’s deep specialisation characteristic of technology supply chains makes relocation slow-paced.
Hence, India needs to leverage the scale of its market and the overall economy.
Open trade policy: Open trade policy is needed for increasing the quantum of manufacturing investments in India.
