ITI gets more BSNL, MTNL freebies for survival

The ailing Indian telecom equipment vendor ITI has received the approval of the Cabinet Committee on Economic Affairs for grabbing 30 percent of procurement orders placed by BSNL and MTNL.

The approval, which will assist the telecom equipment maker to survive in India, follows proposal of the Department of Telecommunications ( DoT ).

The policy will put pressure on private telecom equipment makers such as Huawei, ZTE, Ericsson, NSN, Alcatel-Lucent, etc.

As per the approval, ITI products will continue to get reservation of 30 percent of orders placed by BSNL and MTNL.

In addition,  ITI will get 20 percent of the network roll out orders for their turn key projects (like GSM network roll-out) of BSNL and MTNL.

ITI

ITI would accept orders under the reservation quota only after the price is known and it is commercially viable.

Interestingly, BSNL and MTNL will give 10 percent advance against the orders placed on ITI, subject to liquidation of advances outstanding against previous projects awarded to ITI by BSNL/MTNL. With this, ITI does not face the problem of working capital for execution of orders, subject to adequate safeguards for proper utilization of these advances.

ITI can exercise its option under the reservation quota within 15 days of the opening of bid.

The policy will remain in force for a period of one year from 21.09.2013.

The government will review the policy considering the financial health of ITl after the expiry of this period.

However, the Government has introduced the Public Procurement Bill 2012 in Parliament, and under the provisions thereof, procuring entities, including CPSEs, would have to frame Rules for Public Procurement of Goods, Work and Services. Once such public procurement rules for CPSEs are framed after the enactment of the Public Procurement Act, these would also be applicable to CPSEs under the administrative control of the Department of Telecommunications.

Both BSNL and MTNL are getting financial support of around Rs 12,000 crore from the government as refunding of their BWA license fee.

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