Foreign equipment vendors up in arms against preferential treatment to Indian telecom companies

A day after DoT proposed a 100 percent preference to indigenous telecom equipment and products in government-funded projects, foreign equipment vendors have reacted sharply.


While claiming that they have always adopted a consultative approach in accordance with the Indian government, and work in tandem with local manufacturers to outsource telecom equipment and other telecom products, foreign equipment vendors feel that the whole ecosystem has to work together in order to comply by global telecom norms.


As of now, India does not have its own manufacturing ecosystem and outsources most of its telecom products from Chinese and other foreign manufacturers. However, as per a TRAI mandate in April this year, an increase of indigenous telecom products from three percent in 2009-10 to 80 percent by 2020, with incentives to operators and local manufacturers was recommended.

If a service provider is not able to meet the criteria of market access, then it will deposit an amount equal to 5 per cent of the shortfall in the value of the equipment in the Telecom Research Fund or the Telecom Equipment Manufacturing Fund. 

The Centre also said that it plans to restrict import of telecom equipment to a maximum of 20 percent over an eight-year period, while funding a National Electronics Mission, and incentivizing telecom, IT and electronics manufacturers to boost production.

This move by the government is not practical. Creating extreme policy measures is not the right way to go; rather it is a question of ensuring that the right kind of policies are put in place. A five percent fine is not the right thing to do, rather in its place there should be tax breaks, and incentives provided to develop local manufacturing, as was the case in the IT sector, in order to create additional competition. Buyers should be free to buy quality products,” said Kunal Bajaj, partner and director, Analysys Mason.


Although the objective of DoT and TRAI with this move is admirable, it will have a negative impact in the long-term, akin to going back to the ITR-VSNL days. From a global perspective, a single government cannot be self-sufficient, there has to be sharing of a global ecosystem to allow for free and fair competition,” Bajaj added.

Most Indian telecom operators today, including the likes of PSUs MTNL  prefer to outsource foreign telecom equipment, due to higher quality as compared to local manufactured products, as well as an established brand name.

Indian manufacturing is suffering due to lack of funds and enough impetus for growth, as well as other factors like red-tapism. A boost to the manufacturing sector by means of government incentives would be a boon indeed, but not at the cost of completely banning outsourcing of telecom equipment. Healthy competition between both should instead be encouraged, as that is the only way that indigenous products will gain a higher quality mark, and be able to compete with their foreign counterparts.  

Today, many international telecom equipment vendors are investing in building their India resources to manufacture telecom products of a high standard, under the group’s brand name. The most recent example of this would be NSN, which a few days ago announced that it was expanding its Chennai (Oragadam) manufacturing facility from 35,000 to 55,000 square meters, and increasing the number of product lines to 33, to allow approximately 37 percent export of the facility’s production to other countries in the APAC region.

Commenting on the recent statement regarding preference being given to local manufacturers over outsourced products, a spokesperson from NSN said, We have strengthened India’s position as one of our major manufacturing hubs in the Asia Pacific. Our unwavering focus on the customer, continued investments in the country and the use of available local talent reiterates our commitment towards supporting the growth of India’s growing telecom sector.”


To meet the strong demand for telecom equipment, we have expanded our Chennai manufacturing facility. Since its inception in 2008, we have invested over USD 70 million in the Chennai facility that has rolled out more than 860,000 units to date. Our manufacturing operations are fully indigenized and we are manufacturing state-of-the-art equipment in India such as new multi-radio and LTE products, among other equipment such as GSM and LTE-ready 3G base stations and its FlexiPacket radio in addition.  The innovative Flexi Multiradio Antenna System, which forms part of Nokia Siemens Networks’ Liquid Radio architecture, is also getting manufactured from this facility,” NSN spokesperson added.

Ericsson, Nokia Siemens Networks, Motorola, Huawei, ZTE, Cisco and Ciena are the leading telecom equipment vendors in India.

By Beryl M

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