Several comments on the promotion of local telecom equipment manufacturing to TRAI’s consultation paper indicate that private telecom operators do not want to source important networking equipment from India.
Bharti Airtel, the largest telecom operator in India, said there should not be any govt. mandate for the telecom service providers in India to procure equipment from domestic manufacturers.
We support the cause of domestic manufacturing in the country. It would not be appropriate to prescribe any form of mandate to procure domestically manufactured equipment because the pace of advancement in telecom service sector should not become dependent on domestic manufacturing capability.
It is important to promote domestic manufacturing sector but not at the cost of making telecom service provisioning dependent on domestic manufacturing which could impact the competitiveness of Indian telecom sector, Airtel said.
But BSNL, the state-owned telecom operator, has a different view on promoting local manufacturing.
BSNL should receive incentives to set up in-house manufacturing for telecom equipment — through reduction in license fee / USO obligations. Government can offer incentive to local telecom manufacturing units for supply of equipment to Government projects. Govt should exempt investments made by telecom service providers in R&D and manufacturing of telecom equipment from calculation of Adjusted Gross Revenue (AGR).
Preferential Market Access (PMA) should be provided to domestic manufacturer of telecom equipments by both private and public service providers. Government should ask operators to source locally made telecom equipment with domestic value addition of at least 30 percent.
Global networking / telecom equipment makers such as Cisco, Ericsson, Nokia, among others have shared their recommendations as well.
TRAI is collecting inputs on domestic manufacturing that can enhance job creation at a time when the Boston Consulting Group (BCG) is projecting that the market for robots will reach $67 billion by 2025.
US India Strategic Partnership Forum said the need for large market and scale translates into the necessity for increased focus on an India for the World strategy for telecom manufacturing instead of relying only on an India for India strategy. India’s domestic demand for electronic goods was approximately $64 billion in 2014-15 against $2 trillion global demand.
An export-oriented strategy is essential for the high-end telecom manufacturing sector to achieve the necessary volumes to be globally competitive, creating larger number of jobs, building capabilities within the country and creating pull for local component suppliers to establish and grow.
There is a unique value-addition of advanced global telecom manufacturing coming into the country. The co-location of R&D and high-tech manufacturing leads to a fly-wheel effect, resulting in faster product development and accelerated time-to-market. This builds the eco-system and achieves self-sustainable continuous growth.
Apart from the plastics & mechanicals and electro-mechanical components that contribute only about 15 percent to Bill of Materials (BoM) for some of the low value products, there is no presence of specialty electronics and semi-conductor products which contribute about 80 percent to BoM.
The current system of computing value addition for PMA or every product may not be feasible as the prescribed levels of value addition may not be achievable given the depth and breadth of manufacturing in India.
MAIT said the complexity in manufacturing grows and volume decreases while we move from consumer to enterprise segment. India needs product/segment specific approach to boost local manufacturing. A better approach to focus on export-oriented strategy will guarantee volumes and competitiveness at the same time.
TSDM (Telecom System Design and Manufacturers Association) said implementation of PMA policy will boost domestic manufacturing. Telecom equipment manufacturing should be considered as a vital strategic and an economic imperative similar to the status given to defense manufacturing. This will give India enough space to negotiate and bring all telecom equipments outside the ambit of ITA-1 obligations.
The Telecom Equipment Manufacturing Council (TEMC) has recommended creation of new funding schemes for telecom sector, i.e., Telecom Entrepreneurship Promotion Fund (TEPF), Telecom Research & Development Fund (TRDF) and Telecom Manufacturing Promotion Fund (TMPF) with total outlay of Rs 17,500 crore, as recommended in the 12th Five year plan, should be made operational immediately.
TEMA recommended that India Government should impose 35 percent duty on all wireless equipments, products including handsets. India should mandate TEC specifications for all telecom procurements whether private or public. There should be compulsory licensing for IPRs for telecom and mobile. India should abolish criteria of past experience for local manufacturer’s and start-ups.
ASSOCHAM said PMA will exacerbate production cost and quality for domestic manufacturers in the longer run. Protecting domestic producers may have longlasting bad effect on the competitiveness of the domestic manufacturers as well. The growth of telecom manufacturing and domestic producers hinge upon factors like telecom infrastructure, innovation, research, introduction of transformational enablers of productivity. Developing these aspects in telecom manufacturing only can usher in growth in the sector.
Broadband India Forum said another important aspect of local manufacturing is to review the current state of Passive Infrastructure and what needs to be done to create a Global Manufacturing hub.
India needs to connect 100 percent of cell sites with optical fiber from its present level of mere 20 percent. Hence given the huge local market and the global need for optical fiber, the industry must be given the right platform to scale up. India can feature in the manufacturing map of the world by promoting quality manufacturing of optical fiber.
European Commission said the interplay between patents and standards is important for innovation and growth. Standards guarantee the widespread dissemination of interoperable and safe technologies among companies and consumers. Patents provide incentives for R&D and allow innovative companies to receive an adequate return on investments.
In the view of the European Commission, these key principles reflect two main objectives: on the one hand, incentivising the development and inclusion of high-end technologies in standards, by preserving fair and adequate return for the contributors, and on the other, ensuring smooth and wide dissemination of standardised technologies based on fair access conditions.
US India Business Council said India should focus on investing broadly in infrastructure, human capital development, policy stability and transparency, and the ease-of-doing business. India should refrain from implementing PMA, focusing rather on integrating cutting edge systems that optimize economic benefit and value-added to the broader economy, which attracts foreign high-tech companies to India across the industrial spectrum.
Government policies should also encourage market competition to maximize investment and minimize cost to end users, while at the same time work with industry and academia to develop local talent to stimulate innovation
Indian telecom equipment maker VNL said PMA policy is not a very effective way to revive design lead manufacturing of telecom equipment in the country. Despite of best of technology skills and competitiveness, domestic players can’t compete with the global manufacturers, because of their global economies of scale, financial support from their Governments, predatory pricing etc.