Eligibility cap for telecom equipment exports might rise

As part of its plans to boost telecom equipment exports, the Department of Telecommunications (DoT) is planning to raise the eligibility limit of the Marketing Development Assistance scheme from Rs 15 crore to Rs 150 crore.

DoT has also prepared a six-point agenda, to be given to the commerce ministry. The agenda aims to boost manufacturing of telecom equipment. DoT’s initiatives are expected to improve export-import balance, too.

According to a DoT draft note, the Marketing Development Assistance scheme currently focuses on regions such as Africa, the Association of Southeast Asian Nations, Latin America and Iran, with exports up to Rs 15 crore eligible for subsidy. As the Rs 15-crore limit is too low for any telecom equipment exporter, DoT has proposed the cap be raised.

In its note, DoT said the government should include the South Asian Association for Regional Cooperation (Saarc) region under the focus market scheme to ensure local telecom equipment manufacturers could export to Saarc countries without paying any duty. The zero-duty structure would also help Indian exporters offer the equipment to Saarc nations at competitive costs, the note said.

DoT said domestic supply of telecom equipment should be deemed exports. This status would allow domestic telecom equipment makers to avail of low-cost working capital financing and other export-linked benefits available to exporters, while leveraging the growth of the domestic telecom market, which is still in a nascent stage.

According to government data, in 2011-12, India had exported telecom products worth about Rs 20,070 crore, against Rs 11,000 crore in 2008-09. Between April 2012 and December 2012, exports of telecom products stood at Rs 16,050 crore.

India imports telecom equipment, including mobile phones, worth about Rs 50,000 crore a year. To reduce dependence on imports, the government is implementing a preferential market access policy so that domestic telecom equipment makers are given priority during procurement. The government aims to meet at least 30 per cent of the overall requirement through this.

The DoT note stated manufacturing and competing with imports at zero-duty levels was a big challenge. It was essential to provide a rational tariff structure to domestic units, where all inputs for manufacturing these items were also allowed for import at zero duty, it stated.

DoT has suggested equipment and services be included in all bilateral agreements so that companies can avail of lines of credit in Africa, Saarc and South America. Currently, telecom equipment and services are not covered under the list of eligible products for availing of lines of credit. It has also said telecom products should be included in focused products schemes so that manufacturers of these products get incentives for exports.