DoT not to include Huawei and ZTE in domestic manufactuers' list

The status means value addition of 25% to 45% while making various telecom equipment till 2013-14

DoT not to include Huawei, ZTE as domestic manufacturers

Sounak Mitra and Surajeet Das Gupta

New Delhi, Jan 25

In what could be a major setback to Chinese telecom equipment makers, the Department of Telecommunications (DoT) is planning to reject a request to include Huawei Technologies and ZTE's Indian companies in the list of domestic manufacturers.

The move will adversely impact the two companies, as under the preferred manufacturing access (PMA) norms, a company will be considered a "domestic manufacturer" if it does value addition between 25 per cent and 45 per cent while manufacturing various telecom equipment till 2013-14. The  government also has to mandatorily buy 50-100 per cent of its requirement from indigenous manufacturers and the balance may be sourced from global vendors for various equipment. However by 2020 it will have to buy 100 per cent of the equipment from domestic players.

This means simply, that state owned corporations such as BSNL and MTNL and large projects like the national optic fibre network would give bulk of their equipment requirements to domestic companies. The government is expected to spend as much as Rs 20,000 crore between 2012-13 to 2014-15 on various telecom projects.  

DoT has however said that it has already taken inputs from the industry and have already included fully the members from industry. It has also gone through a list prepared by Telecom Equipment Manufacturers' Association of India (TEMA), and association of Indian telecom manufacturers. It does not now propose to make any additions and could seek inputs from all manufacturers whenever desired.

The DoT’s view  came after two industry bodies — Association of Unified Telecom Service Providers of India (AUSPI) and Cellular Operators Association of India (COAI), had written to the DoT asking it to consider the plea of the Indian units of Chinese telecom equipment manufacturers Huawei and ZTE for including them in the DoT’s list of domestic manufacturers.

A Huawei spokesperson said: "The company has been in India for more than a decade and has invested in world-class manufacturing and R&D centre in India are confident that we will contribute to the growth of the telecom sector if provided a level playing field." ZTE die not respond to an email query.   
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However a top CEO of a domestic manufacturer says: "Every country including USA has such rules for government procurement of telecom equipment. You do not become a manufacturing company by merely setting a unit in the country and doing only screwdriver work in India by importing equipment. You need to substantially value added. That is all what the government has done."  

The national telecom policy has also been pushing for encouraging domestic Indian manufacturing of telecom equipment.   
 
Huawei has already announced investments of more than Rs 10,000 crore in India over a five-year period, part of which would be spent in establishing manufacturing facilities in the country. It has told the government that it already has set of facility in Tamil Nadu in 2009 and has capacity to manufacture a range of telecom products. ZTE India has told the government that they have set up full fledged local manufacturing facility in 2005 in Manesar.