This article was first published in Business World Online on October 09 2026 for reference. Please click here to read the article.
Telecommunications in India has achieved great scale over the past couple of decades, covering almost the entire population of the country and benefiting all its industries. It is the foundation for the digital services, financial inclusion, and public platforms that we avail today. And it is an important enabler of enterprise-level innovation and socioeconomic development. Yet there seems to be a gap between demand growth and value capture. As mobile network traffic continues to outpace revenue growth, the next phase of telecom's evolution will require a greater focus on innovation, indigenous technology development, globally competitive products and IP, and ecosystem-building across AI, next-generation networks, semiconductors, and satellite communications.
This will not only help address the revenue growth challenge but also drive innovation and growth across the broader economy. Realising this opportunity will require stronger collaboration among government, industry, startups, academia, and investors to foster innovation and accelerate the development of next-generation technologies.
Today, India has laid important foundations through Bharat 6G, the India AI Mission, the Semiconductor Mission, and the Telecom PLI Scheme. The next phase of this journey may be shaped by emerging initiatives such as Telecom Manufacturing Zones, which have the potential to create integrated ecosystems connecting research, design, manufacturing, testing, and commercialisation of next-generation telecom technologies.
A structural transition is already underway in the sector. Operators are building out digital ecosystem platforms and increasing their investments in cloud, data centres, AI, and software services. This trend will gain further momentum with the implementation of AI-native 6G architectures. Competitive advantage will be linked not just to network infrastructure but also to semiconductors, software, AI, and compute capabilities. India must do two things concurrently: build more intelligent networks while strengthening domestic capabilities for the technologies and manufacturing ecosystems that support them.
This transition will straddle two industries at once. The networks that support AI workloads and the factories that build the components for those networks rely on essentially the same ecosystem of semiconductors, AI accelerators, data centres, optical systems, software, and cloud platforms. This means that AI and telecom will be very closely interrelated. And their individual and combined success will be determined by the capabilities and ecosystems that India builds, and by our standing in global value chains.
India’s opportunity extends beyond AI infrastructure to AI intelligence. Telecom operators possess unique datasets and ecosystem insights that can help build domain-centric AI models addressing challenges such as fraud, cybersecurity, and network resilience. In the future, competitive advantage will depend less on model size and more on deep industry context, creating opportunities for India to develop differentiated IP, trusted AI solutions, and greater digital sovereignty.
Realising this opportunity will require strong capabilities across the entire telecom and AI value chain, from software and data to networks, hardware, and manufacturing.
India enters this transition with a manufacturing base that has already proven that it can scale up. Over the past decade, we have achieved almost 60 percent import substitution for telecom equipment. Moreover, according to a NITI Aayog Report, India’s telecom network equipment market is projected to nearly double from USD25 billion in FY25 to USD50 billion by FY32, implying annual growth of roughly 10 per cent.
But we must now look beyond scale. The future of India's telecom evolution will be defined by how effectively we complement scale with global competitiveness. Competitiveness, in turn, will depend not just on the network size but also on the strategic capabilities we build across the telecom intelligence stack. This is an area that needs attention, because India has achieved scale in connectivity, handset production and software-led integration, but still doesn’t have adequate domestic capabilities in advanced semiconductors, specialised components, optical technologies, and certain equipment categories. These should be high-priority areas of focus in the coming years.
India's AI, telecom, and manufacturing ambitions are one strategic bet, and they should move together. The growing demand for AI gives us a great opportunity to scale up domestic telecom manufacturing, and this expanded manufacturing base will, in turn, give India greater control over the advanced telecom networks and AI models that will power its economy into the future.
