Telecom equipment manufacturers’ Association of India (TEMA), a group of domestic players, has alleged that certain finance ministry officials have blocked the issuance of Rs 15,000-crore sovereign guarantee to BSNL/MTNL, the funds from which could have been used to clear vendor dues.
The association has written to Prime Minister Narendra Modi seeking intervention on the matter. The state-run companies owe around Rs 20,000 crore dues to various companies, of which Rs 1,000 crore are payable to medium and small enterprises (MSEs). “Vendors of such MSEs, who are in turn also left unpaid are charging 18-24% interest on the unpaid dues and higher prices for further supplies…the MSME companies are becoming uncompetitive compared to large foreign firms, which have better funding at 4-8% interest,” TEMA said in the letter. It further said many of these companies are on the verge of bankruptcy and banks do not fund them as payment cycle has crossed eligible limits.
TEMA, which counts local players such as Sterlite Technologies, VNL, HFCL, Tejas Networks, etc, as members, also demanded that private telecom operators should be asked to procure their equipment from India-owned manufacturing companies in accordance with the public procurement norms. Currently, only the government-owned firms have to comply with the norms but private players are free to procure equipment from any firm. Usually, global firms dominate in the private sector due to better technology and efficient pricing.
“We request the finance ministry allow the release of sovereign guarantee to BSNL/MTNL and instruct them to pay pending dues with priority to medium and small enterprises,” TEMA said.
The association has also raised the problems surrounding performance bank guarantee (PBG). The letter said MSEs are required to pay the PBG as large companies, while most of them do not have enough sufficient bank guarantee limits and thus need to put up to 110% of the PGB as cash deposit.