In Short:
Local telecom equipment makers express concerns that the draft rules for government procurement don’t include 5G equipment. However, many believe the guidelines, which aim for over 50% local value in 36 telecom products, will boost domestic manufacturing and innovation. This initiative supports India’s aim to export telecom gear but raises questions about how it aligns with 5G technology advancement.
New Delhi: A segment of local telecom equipment manufacturers has expressed concerns regarding the absence of 5G equipment in the recently proposed draft rules for local sourcing of government procurement involving telecom gear. Despite this concern, the broader industry perspective leans towards optimism, believing that the draft regulations will substantially enhance domestic manufacturing capabilities.
Draft Guidelines Overview
The Department of Telecommunications (DoT) released draft guidelines on Thursday that emphasize public procurement with a preference for ‘Make in India’ initiatives. These guidelines identify 36 products that are required to have a minimum of 50% local value addition. Additionally, they outline specific rules that government entities must adhere to when acquiring these products.
Impact on Domestic Manufacturing
Industry officials anticipate that prioritizing local companies manufacturing these products in India will foster the development of a robust ecosystem within the country. Mahendra Nahata, Managing Director of HFCL, remarked, “This will encourage a higher level of indigenous production and innovation, positioning India as a leading nation for the export of telecom equipment.”
Products Covered
The list of products stipulated to meet the minimum local content threshold of over 50% includes routers, ethernet switches, media gateways, customer premises equipment, GPON equipment, satellite phones and terminals, optical fibre and cable, as well as telecom batteries. For select products, a minimum local content of 65% is mandated.
Ankit Agarwal, Managing Director and CEO of STL, voiced confidence, stating, “We are confident that this initiative will bolster domestic telecom manufacturing, as these guidelines would be applicable for all central government projects, including Public Sector Units (PSUs) and procurements by states under any central schemes and projects under USOF.”
Concerns Over 5G Equipment
Nevertheless, some industry stakeholders have voiced apprehensions regarding the exclusion of 5G equipment from the list. Rakesh Kumar Bhatnagar, Director General of Voice of Indian Commtech Enterprises (Voice), questioned the government’s stance, stating, “The government is talking of Indian 4G 5G stacks and rip and replacement programmes in the USA and EU through Indian stacks. How can that happen if we have a notification missing new technology solutions on 5G?”
Changes in Local Content Norms
In a move to tighten regulations and promote the ‘Make in India’ initiative, the government had, in July, excluded imported items sourced locally from resellers and distributors from the local content calculation. Furthermore, royalties, technical charges paid outside of India, as well as the supply of repackaged and refurbished goods have also been excluded from this calculation, as per an order from the Department of Promotion of Industry and Internal Trade (DPIIT).
Industry Perspectives
NK Goyal, Chairman Emeritus of the Telecom Equipment Manufacturers Association (TEMA), stated that the release of the draft notification addresses a long-standing demand from the industry and is set to significantly bolster the ‘Make in India’ campaign, promoting R&D innovations and supporting startups.
