India needs to invest in optical fibre, guard against unfair practices of other countries.
Internet connectivity is critical for making the Digital India project inclusive, and widespread use of optical fibre in the remotest corners of the country is vital to ensure that no one is left behind in this endeavour. With over 117 crore telecom users and more than 82 crore internet subscribers, India is one of the fastest-growing markets for digital consumers. A 2019 Mckinsey study rated India as the second-fastest digitising economy. Digital infrastructure, which seamlessly integrates with physical and traditional infrastructure, is critical to India’s growth story and the country’s thrust towards self-reliance.
5G technology is going to make inroads into the country very soon. Top smartphone manufacturers in India have already released phones with 5G capability. Networking equipment that relies on optical fibre and other semiconductor-based device ecosystems are at the heart of building the infrastructure that will be needed when the country takes the next step in its digital journey. The government has taken several measures to build the next generation of digital infrastructure. But the success of initiatives such as Bharatnet Phase III and the world’s largest rural broadband project — which aim to provide broadband connectivity to all 2.5 lakh gram panchayats across the country — hinge on the deployment of high-quality fibres. A basic requirement of 5G will be data transmission networks. Optical fibre is the backbone of the digital infrastructure required for this purpose — the data is transmitted by light pulses travelling through long strands of thin fibre.
Indian manufacturers have a strong presence across the value chain of this industry. In the last 10 years, domestic manufacturers invested more than Rs 5,000 crore in this industry, which has generated direct and indirect employment for around 4 lakh individuals. India exported optical fibre worth $138 million to over 132 countries between April 2020 and November 2021. India’s annual optic fibre manufacturing capacity is around 100 million fibre km (fkm) and the domestic consumption is around 46 million fkm. Indian optical fibre cable consumption is predicted to increase to 33 million fkm by 2026 from 17 million fkm in 2021. A little more than 30 per cent of mobile towers have fibre connectivity; this needs to be scaled up to at least 80 per cent.
In anticipation of this demand, domestic manufacturers have been ramping up their capacities over the last few years. However, India’s optical fibre industry has also seen unfair competition from cheap imports from China, Indonesia and South Korea. These countries have been dumping their products in India at rates lower than the market price. The World Trade Organisation defines dumping as “an international price discrimination situation in which the price of a product offered in the importing country is less than the price of that product in the exporting country’s market”. Imposing anti-dumping duties is one way of protecting the domestic industry. The Directorate General of Trade Remedies has recently begun investigations against optical fibre imports. One hopes that the probe will also catalyse other efforts to encourage local manufacturing.
India needs to invest in R&D, offer production-linked incentive schemes to support indigenous high-tech manufacturing and develop intellectual property in critical aspects of digital connectivity. The digital infrastructure created in the process could serve as a springboard for our growth in the next 20 years. We are at a crossroads now. The need of the hour is to unlock the full potential of India’s optical fibre industry and enable India to emerge as a major manufacturing and technology hub while achieving atmanirbharta in its 5G journey.
The writer, a former secretary Government of India, is a development practitioner