CCEA approves continuation of reservation quota for Indian Telephone Industries Ltd.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a proposal of the Department of Telecommunications regarding continuation of reservation quota for M/s Indian Telephone Industries Limited (M/s. ITI Ltd.).

According to the CCEA, this will enable the ITI to survive in the competitive environment of telecom manufacturing.

The CCEA said that by reserving 30 percent of procurement orders placed by BSNL and MTNL for M/s ITI Ltd., products manufactured by ITI Ltd would be promoted more efectively. It also approved 20 percent of the network roll out orders for their turn key projects (like GSM network roll-out) of BSNL and MTNL.

It said that ITI would accept orders under the reservation quota only after the price is known and it is commercially viable.

It said BSNL and MTNL will give 10 percent advance against the orders placed on ITI, subject to liquidation of advances outstanding against previous projects awarded to M/s ITI Ltd. by BSNL/MTNL., so that ITI does not face the problem of working capital for execution of orders, subject to adequate safeguards for proper utilization of these advances.

The CCEA said ITI shall exercise its option under the reservation quota within 15 days of the opening of bid.

The new policy measures shall remain in force for a period of one year with effect from September 21, 2013 and shall again be reviewed considering the financial health of ITI Ltd. after the expiry of this period.

However, the government has introduced the Public Procurement Bill 2012 in Parliament, and under the provisions thereof, procuring entities, including CPSEs, would have to frame rules for public procurement of goods, work and services.

Once such public procurement rules for CPSEs are framed after the enactment of the Public Procurement Act, these would also be applicable to CPSEs under the administrative control of the Department of Telecommunications, the CCEA said.

It said that both the BSNL and MTNL will be requested to extend the benefit of reservation quota to ITI Limited for a period of one year with effect from September 21, 2013.

The extension of these benefits would ensure enough orders for ITI Ltd. for production activities, said the CCEA.