Trai wants fund for providing venture capital to product manufacturers

Telecom regulator Trai today recommended setting up of a telecom manufacturing fund (TMF) with an initial amount of Rs 3,000 crore for providing venture capital to Indian product manufacturers in the form of equity and soft loans.

In its recommendations on “Telecom Equipment Manufacturing Policy”, the demand for telecom equipment in India was Rs 54,765 crore in 2009-10 which was about 5.5 per cent of the global demand. This is projected to grow to Rs 96,514 crore in 2015 and Rs 170,091 crore in the year 2020.

Telecom Regulatory Authority of India (Trai) said despite the high demand for telecom equipment, the domestic telecom equipment manufacturing industry has not been able to keep pace. The new proposed policy recommended by Trai aims to increase share of the domestic manufactured products.

 

It recommended that domestic manufactured products should be given preferential market access i.e. market pull, to the extent of the percentages indicated for them. Besides, the total excise duty and value added tax (VAT) on domestic manufactured products should be limited to 12 per cent among other fiscal incentives.

It also said that a telecom Research and Development Corporation (TRDC) should be set up at an investment of Rs 15,000 crore. Besides, a telecom Research and Development Park should be established within 2 years with a fund of Rs 5000 crore with the objective of carrying out on-site R&D.

Trai said the cost of implementation of its recommendations is expected to be around Rs 100,000 crore over the next 10 years. But this investment is expected to give a return of almost 10 times.

In Trai’s another recommendations on telecom infrastructure, Trai proposed that infrastructure provider-1 (IP-1) companies should be brought under the unified licence regime. Besides, telecom infrastructure provider companies should be extended tax benefits under Section 80 IA and the electricity distribution companies in the states to provide grid power connectivity on priority for telecom tower sites.

Infrastructure providers (IP-I) should also be permitted to install and share active network limited to antenna, feeder cable, Node B, Radio Access Network (RAN) and transmission system subject to the condition they are brought under the proposed Unified Licensing Regime.

A Unified licensee who does not possess spectrum should be allowed to work as an MVNO in any licensed service area. The Unified licensee ceases to be an MVNO if it is allocated spectrum for accessing the subscribers, Trai said.