Facing pressure from multinationals, India reportedly considers easing local content norms, raising fears that domestic innovation will suffer and the country may become an assembly hub.
The Indian government is reportedly proposing to relax local content (LC) norms for electronics and telecom products, citing structural challenges in the country’s component ecosystem. According to a Deccan Chronicle report, a formal notification has invited stakeholder feedback on this potential policy shift.
The current LC requirements, which aim to ensure 50–60% of product value is sourced locally, are reportedly difficult to meet due to India’s limited availability of key components. This has been highlighted in reports by NITI Aayog, TRAI, MAIT, and companies under the Production Linked Incentive (PLI) scheme.
Industry experts, however, warn that easing these norms could reduce domestic value addition and shift India’s position further toward low-value assembly. The India Electronics and Semiconductor Association (IESA) estimates that the current value addition in the electronics sector is already below 18%, mainly due to high import dependency.
Global firms like Cisco and Ericsson are lobbying for relaxed requirements, saying they face hurdles qualifying as Class-I local suppliers under public procurement rules. They propose that software and design work done in India, regardless of IP ownership, be counted more favourably in LC calculations. Additionally, they seek to exclude non-available components such as chips and PCBs from these norms.
They also want the government to revise classification rules so that imported hardware products with Indian integration or software input still qualify as local. Further, they have urged the relaxation of physical manufacturing thresholds under the Public Procurement (Preference to Make in India) Order.
However, domestic players such as Tejas Networks, HFCL, C-DOT, and Lekha warn that this would harm Indian manufacturers who have invested in local R&D and IP.
According to the Global Trade Research Initiative (GTRI), such a move could discourage genuine innovation and reduce India to an assembly hub once again, putting indigenous firms at a disadvantage in government tenders.
