Policy on telecom hardware shortly

Paper aims at making India manufacturing hub for handsets

The communications ministry is drafting policy measures aimed at promoting the manufacture of telecom and IT equipment in the country.

Telecom department officials told Business Standard a paper was being prepared with the objective of making India a hub for manufacturing telecommunication equipment, specially mobile handsets.

A conference will also be convened in July to discuss the proposals to be worked out jointly by the DoT and the industry.

At present, though India's telecom market accounts for nearly 20 million handsets a year, no manufacturer has established a unit here.

European and US companies have so far preferred to set up units in China because of the lucrative fiscal sops. This is despite the fact that for companies like Nokia, India is the sixth-largest market globally.

Earlier, a number of companies like Samsung, Siemens, and LG had evinced interest in setting up a manufacturing base in the country. However, the companies are awaiting friendly policies from the government and a further increase in volumes.

The Indian Cellular Association, the apex body of all handset manufacturers, is also working closely with the government in formulating the framework for making policies conducive for manufacturing.

"A new policy will be devised soon to eliminate bottlenecks and Indian manufacturers will be given duty sops," officials said.

One of the issues before the government is rationalising the duty structure on handsets to take on the dominant grey market and at the same time making imports less attractive.

The officials, however, indicated there might not be any further duty cuts on mobile handsets as it would jeopardise the business case for local manufacturers.

Already, the customs duty has been brought down to 5 per cent from 27 per cent and sales tax across most states has been set at 4 per cent compared with 16 per cent earlier.

Telecom hub

• US, EU companies have so far preferred to set up units in China because of the lucrative fiscal sops
• Despite being a significant market, no manufacturer has established a unit in India
• The proposed policy is expected to eliminate bottlenecks and give duty sops to manufacturers