Telecom Products PLI: Bharti and Dixon Announce Joint Venture

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The joint venture company, once formed will be owned 26 per cent by Bharti Enterprises, and the rest by Dixon

Dixon and Bharti Enterprises are coming together to form a joint company that will be manufacturing telecom gear in India. First appeared on the Economic Times, the news has come into light just months after the government of India had announced a production linked incentive scheme for manufacturing telecom products in the country. The company will be aiming to manufacture modems, routers, set top boxes, Internet of Things (IoT) devices for the telecom sector. Its list of clients might also include Airtel.

“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,” Saurabh Gupta, CFO, Dixon Technologies , was quoted by the Economic Times.

Contract manufacture Dixon is yet to ascertain which of its entities will be collaborating with Bharti for the joint venture. Dixon Electro Appliances Pvt Ltd, would probably be the one to get finalized. The JV company, once formed will be owned 26 per cent by Bharti Enterprises and the rest by Dixon.

Deven Khanna, Group Director, Bharti Enterprises was quoted saying, “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 also pointed towards the telecommunications sector as a key vertical that has played a significant role in facilitating growth of the economy.

The Union Cabinet, chaired by the Prime Minister, Narendra Modi, had approved Production Linked Incentive (PLI) Scheme for Telecom and Networking Products with a budgetary outlay of Rs 12,195 crore in February 2021. It is expected that scheme will bring more than Rs. 3,000 crore investment and generate huge direct and indirect employments.

Support under the Scheme will be provided to companies/entities engaged in manufacturing of specified telecom and networking products in India. The cumulative investment can be made at one go, subject to annual cumulative threshold as prescribed for four years being met. A minimum investment threshold of Rs 10 crore for MSMEs with incentives from seven per cent to four per cent, and Rs 100 crore for others with incentives from six to four per cent over fiver year above Base Year was announced with the scheme.

“The government has announced the Production Linked Incentive (PLI) schemes for various sectors, including telecom sector, to become a part of the global supply chain,” Sanjay Shamrao Dhotre, Minister for State for Communications, Education and Electronics & Information Technology, had said earlier.

South Korean tech giant Samsung might also be applying for the Production Linked Scheme (PLI) scheme based around telecom gear. The company, in 2020, had announced that it had signed a deal worth $6.64 billion network order with US’ Verizon. It is also rumored that the likes of Jabil, Foxconn, Nokia, Ericsson, Cisco and Flex will also be applying for the PLI scheme around telecom gear.

The final guidelines of the PLI scheme for Telecom Sector are yet to be announced. As a practice, all the other PLI schemes have specified the number of global and national players that will be approved under these schemes.

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