DoT directive to support Indian telecom producers to affect foreign infrastructure players

Taking TRAI’s recommendation a step ahead, a working group constituted by DoT to work on the 12th Five-Year Plan has proposed a 100 percent preference to indigenous telecom equipment and products in government-funded projects, and that service providers should contribute to IPR.

As per a presentation made by the Working Group to DoT, “100 per cent preference for Indian products in government procurement and projects funded by government and USOF (Universal Service Obligation fund) should be given.”


This will be a major to boost to companies such as Indian telecom equipment companies such as ITI, Tejas Networks, HFCL, CDAC, Tech Mahindra and many Indian IT companies. The directive will prompt many domestic business houses to enter the telecom equipment manufacturing space.


If the government goes ahead with the guideline, it will affect the business of Nokia Siemens Networks, Ericsson, Motorola, Ciena, Huawei, ZTE, Alcatel-Lucent and others.

However, many vendors are unhappy about working with public sector undertakings such as BSNL and MTNL due to red tapism. If the government considers mobile handsets as an equipment, it will affect many overseas established handset players as well.

In April this year, TRAI had recommended an increase of indigenous telecom products from three percent in 2009-10 to 80 percent by 2020. To take this forward, TRAI had said that it would provide incentives to operators and Indian manufacturers.  According to a statement made by TRAI at that time, “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.”  


India still does not allow full-scale manufacturing of telecom equipment, although today there are a number of manufacturers who deal in telecom tower equipment, telecom cables, fibre and other related products. However, there has always been a preference for foreign manufactured equipment by service providers in India, on the pretext of quality and established brand names.

Chinese equipment is gaining marketshare due to its low-cost and durability. However, the ban on import of Chinese and other telecom equipments in May last year, due to security issues, prompted Indian telecom operators to go slow on network expansion.This has affected 3G roll outs as well.

The ban was lifted after all foreign equipment vendors were asked to tighten their equipment security norms, while India adopted stricter analyzing of telecom equipment imports. In May this year, former telecom minister, A Raja had said that he plans to make India a global telecom manufacturing hub. A few days ago, the government had also spoken about enlarging India’s share of the global telecom manufacturing pie, bringing it on par with China, and creating approximately 100 million jobs in the sector by 2025.


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. NSN also announced a few days ago 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. supports the growth and the emergence of local telecom equipment industry. But Indian telecom equipment companies are not yet ready to meet quality aspects. Let them come out with innovative products. Indian government should encourage foreign players to manufacture products in India and buy products from them after competitive bidding process. There should be reservation to Indian companies who are yet to test waters.


By Beryl M

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