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Indian telcos want more control in procuring gear

India's top three service providers, Bharti Airtel, Vodafone and Reliance Jio, have spoken with one voice regarding flexibility in procuring telecom gear from vendors, while responding to the Telecom Regulatory Authority of India's (TRAI's) Consultation paper on Promoting Networking and Telecom Equipment Manufacturing in India.

"TSPs [Telecom Service Providers] should be allowed to procure/use all products i.e. globally available or indigenous manufactured, so as to have the latest equipment and network system as per technological advancement," says Bharti Airtel's response to the consultation paper.

Even so, the service provider suggests an "incentive-based approach to encourage procurement of indigenous NATE by TSPs. In such NATE [Networking and Telecom Equipment] procurement cases, an exemption of GST on the procurement of NATE may be provided as an incentive."

Indian vendors recommend a combination of incentives and penalties to boost domestic manufacturing.
 (Source: rahul jarwal on Unsplash)
Indian vendors recommend a combination of incentives and penalties to boost domestic manufacturing.
(Source: rahul jarwal on Unsplash)

Airtel also recommends that the benefits of the PLI scheme should be available to all vendors, whether global or Indian, who meet requirements. However, it also raises concerns over whether the domestic industry's capacity and policy mandates can impact the network rollout of the telcos.

"Given India's domestic manufacturing capacity limitations and the need for sectors growth and rollout of services to citizens of India in a timely and effective manner, we believe that existing and planned rollout of industry should not be constrained/disrupted due to any policy mandates like PMA/PLI," said Airtel.

Reliance Jio, which is developing its own 5G solution, said that it supports the "concept of Preferential Market Access [PMA] for domestic manufactured products and believes that it can be an effective tool for promoting Indian products."

Even so, it said, "PMA policy should be in the form of a nudge intervention ensuring positive reinforcement and influences the behavior by way of incentivising through preferential market access."

The government is trying to promote the manufacturing and purchase of domestic telecom gear by the Indian service providers. It launched the Production-Linked Incentive (PLI) scheme in 2021 to boost the local production of telecom gear.

This comes at a time when Chinese vendors Huawei and ZTE were not allowed to participate in 5G trials, and are yet to receive trusted equipment approval from the government.

The domestic vendors' story

However, Indian vendors recommend a combination of incentives and penalties to boost domestic manufacturing.

In its submission, the Telecom Equipment and Services Export Promotion Council recommends using a part of the Universal Service Obligation Fund (USOF) for the research and development of indigenous products and solutions.


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Tejas, in its submission, recommends incentives for Indian telcos to boost domestic manufacturing.

"It is recommended that license conditions of telecom operators be modified to give them incentive equal to 50% of the value of made in India products as specified in DOT PMI (Preference to Make in India) policy," said Tejas.

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— Gagandeep Kaur, contributing editor, special to Light Reading

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