India’s burgeoning domestic telecom equipment manufacturing sector is experiencing explosive growth, fueled by a significant shift in the defence sector’s sourcing strategies. For years, India relied heavily on foreign vendors, particularly companies from China, for its communication infrastructure needs. However, escalating geopolitical tensions and national security concerns are driving a decisive move towards self-reliance, creating a lucrative new frontier for Indian companies.
Leading the charge are domestic giants like HFCL Ltd, Sterlite Technologies Ltd (STL), and Tejas Networks Ltd. These companies are not only securing substantial defence contracts but also actively developing advanced intellectual properties (IPs) to meet the growing demand. Senior executives, speaking anonymously, reveal ambitious plans to scale their defence-related businesses to upwards of ₹3,000 crore (approximately $360 million USD) within the next two years. This aggressive expansion reflects the immense potential unlocked by India’s indigenization drive.
Tejas Networks, a Tata Group company, stands as a prime example of this success. N. Ganapathy Subramaniam, the company’s chairman, highlights their innovative integrated single-tower network structure, eliminating the need for duplicate infrastructure and significantly reducing capital expenditure for telecom operators. This strategic technological advancement showcases the ability of Indian companies to not only compete but also to innovate beyond global counterparts.
The shift towards domestic suppliers isn’t merely a reaction to geopolitical concerns. Several contributing factors are accelerating this trend. The US and India represent two of the largest markets globally for defence communications contracts, making an India-focused strategy increasingly attractive for manufacturers. Furthermore, the refusal of some foreign providers to grant access to certain sensitive technologies has created a critical opportunity for Indian companies to fill the void.
Sterlite Technologies’ Managing Director, Ankit Agarwal, exemplifies this point. He emphasizes the company’s success in developing fibre optic perimeter sensing technologies – previously unavailable from international vendors like NEC due to cited national security restrictions. STL’s solution now incorporates AI and ML algorithms to enhance accuracy and efficiency, offering a ‘made in India’ solution at competitive pricing.
The industry’s transformation extends beyond specific companies. Consultancy firm EY India’s telecommunications leader, Prashant Kumar Singhal, notes that a natural upgrade cycle for defence telecom infrastructure, coupled with the introduction of new technologies, will continue to generate substantial business for Indian manufacturers. These contracts, typically spanning three to five years, are projected to constitute around 10% of India’s overall telecom infrastructure spending within the next three to five years. This represents a dramatic increase from the currently negligible contribution of the defence sector.
HFCL’s managing director, Mahendra Nahata, confirms the significance of defence contracts to the company’s revenue, highlighting a dedicated R&D team collaborating closely with the Indian defence forces. While specific figures aren’t publicly disclosed, Nahata previously indicated that defence contracts could account for 33-50% of HFCL’s net revenue, depending on market conditions. This, coupled with India’s substantial import bill for telecom equipment, further emphasizes the strategic importance of promoting domestic manufacturing.
Beyond immediate gains, the long-term potential is staggering. HFCL projects a global business opportunity of $138 billion (₹11.7 trillion) in defence contracts over the next decade. STL’s projections for optical fibre demand from defence agencies worldwide further reinforce this optimistic outlook. The projected 7% annual growth in demand (excluding China) paints a picture of a rapidly expanding market. This combined with the emphasis on cybersecurity, data localization, and privacy, is driving investment in R&D to ensure that Indian products can meet the demands of this growing market.
In conclusion, the confluence of geopolitical factors, a proactive push for self-reliance, and technological innovation is creating an unprecedented opportunity for India’s domestic telecom equipment manufacturers. This surge is not just bolstering individual companies but fundamentally reshaping the global telecom landscape, positioning India as a major player in defence communications infrastructure.
