Even as India boasts of the world's third-largest base of technology startups, the story is surprisingly disappointing where telecom startups are concerned.
Over the years, India has produced only a handful of notable telecom companies, including Tejas Networks (now acquired by the Tata Group), Sterlite Technologies, Saankhya (now acquired by Tejas) and HFCL, among others. It is not surprising, then that India depends on imports, almost entirely, for its telecom equipment requirements.
However, this promises to change now with several new telecom startups coming up. Further, technology, as well as policy developments, are creating the right conditions for the development of the startup ecosystem.
The emergence of 5G, coupled with a change in government policies, is changing the situation and leading to a spurt in the number of telecom startups in the country.
Growing competition from over-the-top (OTT) players means that the telcos are pushed against the wall to innovate, which requires bringing down silos and working with newer companies, including startups.
Further, 5G itself is a more software-centric technology, and India has already proven its expertise in software development. Software development is also not as capital-intensive as hardware, making it easier to start a telecom venture. 5G also enables several new use cases and allows them to go beyond the commoditized voice and data services.
"5G network architecture is very different from that of the previous technologies. It demands the adoption of the cloud, but service providers come with limited expertise in it. All this has led to an increase in the number of startups in telecom, the internet of things (IoT), semiconductors and open RAN," said Neil Shah, vice president of research at Counterpoint Research.
Signs of change
The top three private Indian telcos have now started collaborating with the startups. For instance, Bharti Airtel acquired a 10% stake in an AI startup, Waybeo, and acquired majority stake in SD-WAN startup, Lavelle Networks. It also organized a Startup India Innovation Challenge earlier this year. Vodafone Idea partnered with several startups, including Vizzbee Robotics Solution, Tweek Labs and Athonet. Reliance Jio collaborates and partners with several startups through JioGenNext, a startup accelerator program.
This is an opportune time to start a telecom venture in India as the government is keen to promote startups. The Department of Telecommunications (DoT) approved a grant of INR 500 million ($6.18 million) to 43 startups. This aligns well with the Atma Nirbhar Bharat (self-reliant India) push by the government to promote the development of domestic telecom vendors. The government has also come up with a "Make in India" policy to promote domestic manufacturing.
"Initially, we faced a lot of challenges by not getting any guidance and financial support, but in past few years government support is quite visible against Make in India initiative where we are getting opportunities when to deploy our solutions with major service providers; as well we are getting financial support," said Gaurav Gandhi, founder and chief executive officer of Echelon Edge, one of the startups to receive a grant from the DoT.
Another reason for the growing telecom startup ecosystem is the departure of Chinese vendors, Huawei and ZTE, from India. The Chinese vendors could not get trusted-vendor certification from the government, which prevents service providers from handing over any new contract to them. India is an extremely price-sensitive market, and now there is a requirement for vendors who can provide products at cheap rates. The government hopes that this gap will be filled by a domestic vendor.