Trai restarts consultation to boost local manufacturing of telecom gear

NEW DELHI: India’s telecom regulator restarted industry consultations on boosting local manufacturing of telecom equipment, which, it said, had not seen the same kind of growth that was seen by mobile phone production, despite government incentives, and that the country still imported 90% of its gear requirements.

In a consultation paper issued Monday, the Telecom Regulatory Authority of India (Trai) sought stakeholder views on policy framework needed to boost local telecom equipment manufacturing and measures for implementation, while also seeking suggestions on measures to be taken for attracting foreign direct investment (FDI) in this segment in India.

“While a liberal trade policy enabling import of telecom equipment with low or no duty has kept both service providers and consumers happy, the lack of capacity building for domestic production poses a serious challenge to India’s continued success in the telecom sector,” the regulator said.

“Apart from economic reasons, the security concerns arising out of excessive reliance on foreign manufactured products also suggest that India should aim at achieving self-sufficiency in telecom equipment manufacturing,” the regulator explained, while issuing the consultation paper suo-moto, with nearly a dozen questions.

India’s import bill has increased at a rate of 16.3% annually between 2012 and 2016 while the exports have declined at 17.98% a year at the same time, primarily due to relentless competition from China. As per telecom department data, imports worth over Rs 55,000 crore were made in 2012-13 while exports of telecom equipment were around Rs 20,000 crore. But in 2015-16, imports were over Rs 1 lakh crore and exports had reduced to just over Rs 10,000 crore.

“In the past five years, there has been an exponential growth in the technology in the telecom sector… a need has therefore been felt to revisit the issue of promoting local manufacturing in telecom sector,” the regulator said.

The regulator said it aims to realistically assess India's true potential in equipment manufacturing with the aim to frame recommendations to transition Indian telecom industry from an import-dependent industry to a global hub for manufacturing. Trai cited a report which showed that over 90 per cent of the demand of telecom equipment in India was met through imports in 2013-14, and was the same even now.

Last date for comments on the consultation paper is October 16 and counter-comments, if any, October 30, 2017. Trai’s paper on telecom equipment manufacturing comes six years after it first issued a paper on this issue in 2010 and issued recommendations in 2011.

The consultation paper will also discuss the controversial issue of standard essential patents and grant of their licence for use on the basis of fair, reasonable and on-discriminatory (FRAND) terms. The issue has been a bone of contention between domestic mobile phone companies and European multi-nationals, and the regulator has asked for suggestions of resolving disputes around royalty distribution on Frand basis.



The regulator has also sought views on identifying policy measures required to boost innovation and productivity of local telecom manufacturing, while examining existing patent laws in the context of promoting local manufacturers and current fiscal incentives to promote local telecom manufacturing.

“Today, the services sector commands nearly 60 per cent of India's gross domestic product(GDP) whereas the share of manufacturing, a major contributor to the infrastructure domain, has been stagnating at around 16 per cent on average since 1990,” the regulator said.

Trai has also asked for views on current fiscal incentives to promote local telecom manufacturing, and for reasons behind poor performance of local telecom manufacturing industry despite numerous initiatives by the government and industry. It has also sought for short-comings and framework suggestions for standardisation, certification and testing of telecom equipment.

The regulator has also asked whether any issues under Information Technology Agreement(ITA) - a global agreement under which countries have committed to exempt certain electronic and telecom products from customs duty - needed to be addressed for making the local telecom manufacturing more competitive and robust.