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The National Security Council Secretariat has asked to the Government to incentivise domestic telecom equipment manufacturing n India to reduce dependency on imports, especially from Chinese Vendors.
According to a recent discussion, the Council has recommended setting up of special economic zones for high-end telecom manufacturing that would both assure domestic market as well as promote exports to reap the benefits of economies scale and make India an technologically proficient and low-cost workforce to boost the growing domestic telecom market. His would only be possible through clear policy directions and framework, stated the Council.
According to US-based Ovum Research, the demand for telecom equipment is estimated at about Rs 76,940 crore or 6.2 per cent of the global demand of Rs 1,638,255 crore in 2012-13.
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The requirement of 3G equipment is expected to be about Rs 10,127 crore and LTE and WiMax would be about Rs 12,659 crore in 2015-16. So, if the domestic manufacturing is not initiated, India will be compelled to import USD 150 billion of semi-conductors during the next 10 years, according to the Council report. Also, the dependence on equipment imported from overseas vendors, including the Chinese, raises inherent security concerns.
The Council has further said that the Government could consider whether expenditure on R&D could be made eligible for tax benefits and if expenditure would be made mandatory, keeping in mind companies like state-owned Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).
The Council has also asked the Department of Telecommunications (DoT) to encourage chips and telecom equipment manufacturing through priority financing and early clearance for setting up of facilities by the home-grown companies.
According to the Council discussion, since blocking of procurements from foreign companies may not be practical proposition given the current state of development in the telecom sector in the country, there should be strong systems for assurance, testing and certification before any component is integrated into the national telecom network. It has also asked the Government to follow he models adopted by countries like United Kingdom.
Meanwhile, the Government has already in process of implementing Preferential Market Access (PMA) where telecom companies and government will have to give preference to made-in-India telecom products due to ‘security issues’. DoT has already notified the same on October 30, 2012.
