A silent revolution is unfolding in the telecom hardware space in the country with little known Indian gear makers venturing into frontier technology to roll out 4G network equipment in direct competition with global heavyweights such as Ericsson and Nokia-Siemens Networks.

Smart technopreneurs are leapfrogging technology to create a space for themselves in the 4G market, having missed the bus in the 2G and 3G arena where giant equipment manufacturers earlier helped telecom operators roll out massive networks connecting India’s 900 million mobile phone subscribers.

Now, with world graduating to next generation networks, and operators testing or rolling out 4G networks and devices, including in India, boutique firms like PointRed Telecom and Kavveri are honing their R&D skills and erecting dedicated assembly lines in the country to carve a slice of domestic and global markets for themselves. In the process, they are set to challenge the dominance of Ericsson and Nokia-Siemens Networks (NSN) that have manufacturing facilities in the country and are firmly entrenched in the Indian telecom infrastructure space alongside Chinese majors Huawei and ZTE.

While the established players have decades experience in 2G and 3G equipment market in India, the new entrants look set to primarily focus on the virgin 4G territory that is expected to touch a staggering market size of $6-7 billion in five years from now.

Right now, these outfits are either setting up greenfield projects, expanding existing capacities or moving acquired units to India. “With less than 10 per cent broadband penetration in India alone, the market is set to grow to $6-7 billion within the next five years. There is huge potential”, said Balaji Kulothungan, CEO of PointRed Telecom.

The facility, according to Kulothungan, will “come at an investment of Rs 200 crore. Three assembly lines will employ minimum of 50-60 people”. It will manufacture USB dongles, CPE and 4G-LTE equipment like base stations.

Bangalore-based Kavveri Telecom, a listed entity, has been a global solutions provider for telecom infrastructure and wireless products for the past 20 years. With its manufacturing facility spread over 150,000 sq ft in Bangalore, Kavveri is set to join the race for 4G equipment market. This facility will be used as “a global hub of manufacturing radio frequency (RF) products and antennas,” said Shivakumar Reddy, the company’s MD.

Not content with the domestic market, these companies are exporting globally. Reddy said, “Kavveri supplies radio frequency (RF) products and antennas for 4G networks in North America, Latin America and Europe. We even supply products to Chinese companies like Huawei and ZTE”.

Kavveri is looking to increase share of exports to 50 per cent from 35 per cent over next three years.

PointRed has plans to invest Rs 125 crore for 4G-technology and another Rs 50 crore for R&D efforts. Compared to Nokia-Siemens Networks (NSN) that invested ¤2.213 billion in global R&D efforts in 2011 alone, this figure looks miniscule.

India’s market for electronics is expected to grow to around $400 billion by 2020, with current levels of manufacturing taking domestic production to only $100 billion. The established players, NSN and Ericsson, have cornered a large share of 2G and 3G infrastructure market in India.

Daniel Sundelius, head of supply site, Ericsson India, said, “Ericsson has significantly increased its local production capabilities in terms of capacity and cutting edge technology.” Ericsson operates a 21,000 sq m facility in Rajasthan and is “extending its capabilities towards exports from India,” he added.

NSN was chosen by Bharti Airtel for building and operating its time-division long-term evolution (TD-LTE) 4G network in Maharashtra while Chinese equipment major, Huawei was enlisted as its technological backbone partner and provide managed network services for 4G LTE network rollout in Karnataka.

Companies like Kavveri Telecom and PointRed Telecom will have their task cut out trying to break into 4G-telecom infrastructure market. By focusing only on a few products, they may give the likes of NSN and Ericsson a tough fight. For the health of the telecom market in India, the emergence of new players is a move most welcome, with Kulothungan adding, “The era of electronics manufacturing contributing to the growth of GDP is on the horizon. India has the best resources and commercial advantage at present.”