The Possible Role of the MSME Sector in India’s Telecom Industry

By Anil Kumar Jain

President, Digital Communications India Forum (DCIF)
Published: 04 July 2026

India’s Micro, Small and Medium Enterprises (MSMEs) are emerging as a vital force in transforming the telecom sector—from manufacturing and innovation to service delivery and digital adoption. With over 60 million MSMEs nationwide, this segment offers both a massive market for telecom operators and a growing base of domestic manufacturers and solution providers.

Why MSMEs Matter in Telecom

1. Domestic Manufacturing and Supply Chain

Production-Linked Incentive (PLI) Scheme: The government’s ₹12,195 crore PLI scheme for telecom and networking products has already approved 42 companies—28 of them MSMEs—boosting local production of routers, IoT devices, 4G/5G radio equipment, and more.
Job Creation and Investment: As of May 2025, PLI beneficiaries (including many MSMEs) have invested over ₹4,300 crore, generated sales of ₹85,000+ crore (including exports), and created 28,000+ jobs.
Import Substitution: With telecom equipment imports worth around ₹50,000 crore (mostly from China), MSME-led local manufacturing can reduce dependence on foreign supply chains and strengthen India’s strategic autonomy.

2. Innovation and Indigenous Technology

Digital Communications Innovation Square (DCIS): DoT has supported 126 projects led by startups and MSMEs with ₹108 crore, focusing on indigenous 5G, chipsets, core networks, RAN, and IoT solutions.
Grants and Mentorship: Under DCIS, startups receive up to ₹50 lakh, MSMEs up to ₹2 crore, and consortia up to ₹10 crore, along with incubation and technical advisory support.

3. Service Delivery and Digital Enablement

Untapped Revenue Pool: Telecom operators see MSMEs as the next big growth engine. With 60 million small businesses, telcos could generate ₹50,000 crore annually by offering digital commerce, cloud, security, and local advertising solutions.
Enterprise Solutions: Companies like Jio, Airtel, and Vi are rolling out tailored offerings—cloud telephony, fixed-line connectivity, network security, G-Suite bundles—specifically for MSMEs.

How the Government Can Help MSMEs in Telecom

1. Financial Support and Incentives

Reimbursement of Testing & Certification Costs: DoT’s 2024 scheme reimburses 75% (startups), 60% (micro), and 50% (small enterprises) of testing/certification expenses, with a ₹25 crore corpus and ₹50 lakh cap per entity.
PLI and DCIS Grants: Continued expansion of PLI eligibility and DCIS funding ensures MSMEs can scale R&D and manufacturing without prohibitive upfront costs.

2. Infrastructure and Ecosystem Enablement

Telecom Centres of Excellence (TCOE): These hubs guide MSMEs through TEC certification, coordinate with testing labs, and ensure timely reimbursement disbursement.
BharatNet and PM-WANI: Expanding broadband and public Wi-Fi creates more opportunities for MSMEs to offer last-mile services, IoT deployments, and local digital solutions.

3. Policy and Regulatory Ease

Simplified Licensing: Amendments allowing deduction of cable TV revenue from gross revenue for internet+cable operators reduce compliance burden for small players.
Spectrum Access and 5G Readiness: Ensuring affordable access to spectrum bands (700 MHz, 3300 MHz, 26 GHz) helps MSMEs participate in 5G rollout and private network deployments.

How Industry Associations Can Support MSMEs

1. Advocacy and Policy Engagement

Lobbying for MSME-Friendly Policies: Associations like COAI, ASOCHAM, and NASSCOM can push for lower compliance thresholds, easier access to spectrum, and tax incentives for telecom MSMEs.
Representation in Standards Bodies: Ensuring MSME voices are heard in TEC, 3GPP, and other standards-setting forums helps them align products with national and global requirements.

2. Capacity Building and Knowledge Sharing

Training and Certification Programs: Workshops on TEC certification, 5G technologies, cybersecurity, and export compliance can upskill MSME teams.
Mentorship Networks: Pairing MSMEs with established manufacturers and telcos fosters technology transfer and market access.

3. Market Access and Collaboration

B2B Matchmaking: Organizing vendor meets, trade fairs, and reverse buyer-seller sessions connects MSMEs with telcos, PSUs, and global buyers.
Consortium Building: Encouraging MSME clusters to form consortia helps them bid for larger projects (e.g., smart cities, defense telecom) and share R&D costs.

Challenges and the Way Forward

Despite progress, MSMEs face hurdles like high certification costs, limited R&D budgets, and competition from large domestic and Chinese firms. Sustained government support (financial, infrastructural, regulatory) and proactive industry association engagement are critical to unlock MSME potential.

With the right ecosystem, India’s MSMEs can become not just beneficiaries of telecom growth—but drivers of it, powering indigenous innovation, job creation, and digital inclusion across the country.