India Telecom

September 17, 2004
Govt. to promote Rs. 100,000 crore telecom manufacturing opportunity

NEW DELHI -- A government sponsored round table on telecom defined the manufacturing opportunity in the next three years in this sector at Rs. 100,000 to Rs. 120,000 crores. It also announced that the government would be proactive in ensuring that this level of equipment is made in the country itself.

Dayanidhi Maran, Communications and Information Technology Minister, told the conference here on Monday that "We should take a hard look and see if service providers can confine imports only to those items that cannot be manufactured in this country." Maran and the Planning Commission Deputy Chairman Dr. Montek Singh Ahluwalia referred to the inverted duty structure on equipment that was hampering domestic production of equipment making wholesale imports cheaper. They emphasised the need for a review of this duty structure.

N.K. Goyal, president, TEMA, denied that indigenous manufacturers were asking for protection. He demanded level playing field. "Please do not make local manufacturing costly vis-à-vis imports due to fiscal policies," Goyal told the Minister at the meeting where manufacturers and operators were present and the Minister listened to all the presentations for over three hours at a stretch.

Under the present inverted duty structure, importing fully assembled equipment was cheaper than buying it locally. Only the PSU operators were buying indigenous equipment while the private sector operators were going in for large-scale imports.

Nripendra Misra, chairman, Telecom Commission, admitted that while the telecom infrastructure in the country had grown from 20 million telephones at the beginning of this decade to 40 million fixed lines and over 30 million mobile phones in just four years, telecom equipment manufacturing growth rate has been near static or negative in the last few years.

Misra compared this to China’s telecom equipment market that was US $20.4 billion worth. Nearly US $18 billion worth of the equipment for this had come from domestic production. Giving detailed figures, Misra said that MNCs such as Motorola, Siemens, Alcatel, Lucent, Nortel, Nokia, Ericsson, etc. had established manufacturing facilities within China with a large part of the equipment locally made and each facility making billion of dollars worth of equipment, thereby providing employment to a total of over 60,000 people. "While the Chinese telecom boom is being fed by domestically manufactured products, in India, most the telecom equipment is being imported," Misra noted.

The conference recommendations include, reversing the duty structure to promote local manufacture, mandating use of local equipment for all operators, strengthening R&D and tying up with global companies for latest technologies and seeking market in APAC countries.