Telcos may have to buy critical parts only from local makers

Telecom companies may have to procure SIM cards, broadband modems and 16 other items from local manufacturers starting April 2013.

An expert committee set up by the Department of Telecom has identified 18 hardware items, used for telecommunications, which will be put under a preferential market access category.

These items will be marked as sensitive from the security point of view in order to comply with the WTO norms. The DoT is expected to finalise the recommendations made by the expert group and announce the policy shortly.

Under this policy, the DoT will make it mandatory for all telecom companies to procure at least 30 per cent of all electronic equipment that are locally manufactured. Some items such as SIM cards, modems used for WiFi or 3G broadband services and EPABX boxes will have to be procured completely from manufacturers in India.

The policy will be applicable to both private and public sector telecom companies. All products manufactured by entities that are registered and established in India will be considered for the preferential access. This includes entities in Special Economic Zones, original equipment manufacturers and contract manufacturers. In addition to manufacturing in India, the companies will have to ensure that there is some amount of local value addition. According to the proposed policy, the minimum value addition should be 25 per cent in the first year and 45 per cent in the fifth year.

The proposal to give preferential treatment to ‘Made in India' products was first mooted by a committee formed by the National Manufacturing Competitiveness Council (NMCC) and the Advisor to Prime Minister on Public Information, Infrastructure and Innovation.

The policy was being opposed by foreign players, including Nokia Siemens and Ericsson, on grounds that it would give unfair advantage to local players. They had cited provisions of the international trade treaties to prevent the policy from being adopted.

LOCAL PLAYERS TO BENEFIT

However, the Ministry of Communications wants to bring out this policy in a bid to address balance of payment issues as currently India imports telecom equipment worth billions of dollars every year. The proposal is backed by local players such as Shyam Telecom, Tejas Networks and Coral Broadband. The Telecom Equipment Manufacturers Association has given a list of Indian manufacturers who are ready to supply telecom equipment ranging from fourth generation (4G) wireless systems to security and surveillance communication systems.