Centre’s vocal for local campaign fails to enthuse domestic telecom companies

Homegrown telecom companies are not much enthused by the Centre’s ‘vocal for local’ campaign to make ‘India self-reliant’ (Atmanirbhar Bharat) since they feel the government departments and public-sector firms would continue to contravene policy framework.

“The Centre’s push for vocal for local or Make in India needs to be percolated down to departments and officers. For the last many years, Preference to Make in India is not followed by several state-owned firms, Smart City programs, and other state-funded initiatives in the telecom sector,” NK Goyal, chairman, Telecom Equipment Manufacturing Association (Tema) told ETTelecom.

Last week, Prime Minister Narendra Modi in a televised address stressed upon the need to make the India self-dependent and asked the countrymen to go ‘vocal for local’ by advocating the use of indigenously-made products.

But, the Indian telecom equipment makers feel that the Centre’s renewed campaign appeared to be an eyewash since the domestic companies in the telecom industry have not benefited under the Commerce Ministry’s policy framework originally notified in 2017.

“In line with the Prime Minister’s clarion call for an Atmanirbhar Bharat, the government should enforce compliance for domestic products in respective departmentsVNL’s”—Rajiv Malhotra

“Merely announcing policies does not help the industry, what matters is assured market access to sell their products,” Rajiv Malhotra, founder and chairman of Vihaan Networks Limited (VNL) said, and added that in line with the Prime Minister’s clarion call for an “Atmanirbhar Bharat”, the government should enforce compliance for domestic products in respective departments.

“There are many challenges. Although there is PPP-MII Order 2017 to ensure preference to Make in India in government procurement, but in most tenders it is either not followed or pre-qualification criteria are put so stringent that domestic industry can’t participate,” Malhotra added.

India-origin equipment makers rely on exports which constitutes more than 50% of the overall industry business of Rs 22,000 crore annually.

“Vocal for local initiative may yield results in the longer-run, and equipment makers who fall within the norms may able to avail access to more credit,” Shyamal Ghosh former telecom secretary and chairman of Telecom Exports Promotion Council (Tepc) said, and added that ‘systems sometimes don’t deliver’ as expected.

Ghosh added that it was the industry’s demand to impose reciprocity clause where Indian companies couldn’t deliver products.

“Vocal for local initiative may yield results in the longer-run, and equipment makers who fall within the norms may able to avail access to more credit”—Shyamal Ghosh, former telecom secretary

Days ahead of the United States President Donald J. Trump India visit in February this year, the Centre has included the reciprocal market access Clause 10(d) to the Preference to Make in India (PMI) policy for countries that do not allow market access to Indian companies.

“Make in India is needed to be implemented in a more effective manner. We must immediately invoke clause 10 (d) of the public procurement order,” Rakesh Kumar Bhatnagar, sector expert and former Advisor (Technology) at the Department of Telecommunications (DoT) said.

The move was though seen as an attempt to restrict China-origin companies such as ZTE, UTStarcom, Huawei, TP-Link and Fiberhome but the homegrown companies feel that the policy lacks teeth.

“We should have been bold enough to say that China is denying market access to Indian companies in the telecom sector. The present DoT memorandum on 10(d) lacks clarity and is non-implementable,” Bhatnagar added.

“We should have been bold enough to say that China is denying market access to Indian companies in the telecom sector. The present DoT memorandum on 10(d) lacks clarity and is non-implementable”—RK Bhatnagar, former DoT advisor

However, a senior executive at one of the top two Chinese telecom gear companies contradicted the domestic firms and said that foreign companies are allowed in China subject to local compliance in the communist-ruled country.

“Indian telecom equipment vendors or original equipment makers should provide competitive products and invest in the local market to explore business opportunities since Chinese law does allow foreign companies such as Cisco, Nokia and Ericsson to do business locally.

Government-owned companies and agencies constitute nearly 30% of the overall buying demand, and Indian companies finding it hard to supply despite Preference to Make in India (PMI) guidelines calling for a 100% domestic purchase for certain specified products.

Goyal further said that the Make in India policy must be strictly enforced, since in many cases bid documents violate the policy in letter and spirit, and must be immediately dealt with, and the need of the hour was to provide fair business opportunities for Indian products to leverage large home market.

In a recent tender issued by the state-run Bharat Sanchar Nigam Limited (BSNL) for network expansion, a Delhi-based telecom group alleged that the telco had deliberately included restrictive conditions to prohibit local equipment vendors.

“The government must promote domestic telecom products in a mission-mode, by offering research and development (R&D) funds”—Tejas Networks’ Sanjay Nayak

Bengaluru-based Tejas Networks which is one of the few Indian companies exporting telecom equipment in as many as 60 countries said that the government must promote domestic telecom products in a mission-mode, by offering research and development (R&D) funds.

“We must use a public-private partnership to create new-generation of secured 4G and 5G products within the country, which will not only save us tens of billion of dollars in annual imports but can also become a strong engine for exports especially in the new global geopolitical situation that has emerged due to the Covid-19,” Sanjay Nayak, chief executive of Tejas Networks said.

Following Modi’s call to promote localised products, the Finance Ministry on May 15 notified the amendment in the General Finance Rules (GFR) 2017 to disallow global tenders to encourage micro, small and medium enterprises (MSME) take part in tenders below Rs 200 crore but have given the power to respective departments in ‘exceptional case’ scenario to consider global tender enquiry (GTE).

“With no clarity in GFR, it will be again open to manipulation by officials with their own interpretation while the intended purpose may defeat further,” Bhatnagar added.

—India Finance News