Delhi-based telecom group that represents Finnish Nokia, Swedish Ericsson, and the US-based Cisco, has asked the Department of Telecommunications (DoT) to define the value composition for hardware, and software design and development as a part of local content.
In a letter to telecom secretary, dated July 11, the Cellular Operations Association of India (COAI) said that there were multiple challenges on account of “impractical local content norms” in the Preference to Make in India order.
Following the recent controversy and tightening of rules around participation of Chinese Huawei and ZTE in state-run network deployments, both European rivals see India’s policy push to fuel indigenous production as a bottleneck to their local ambitions, particularly for public sector procurement.
“We are seeking support from the government so that our total value addition in India in products and services are taken into consideration for the public procurement scheme,” said Ericsson spokesperson.
Last month, Bharat Sanchar Nigam Limited had to cancel its Rs 9,000 crore worth of fourth-generation or 4G network supply and upgrade tender on the back of allegations of restrictive conditions to discourage homegrown vendors and India’s border standoff with China.
Both Nokia and ZTE who deployed 2G and 3G networks for the state-owned telco were keen to undertake proprietary migration to 4G for BSNL.
“Ericsson has been investing in India both for its state of art manufacturing facility as well as developing local competence for implementation, network design, optimization, and support for telecom equipment being supplied to telcos in India.
Query to Nokia did not elicit any response.
“Many of our global original equipment maker members have invested significantly in R&D and innovation activities in India but due to the nature of their global operations, the IPR for the same resides outside of India,” COAI director general SP Kochhar in the letter said.
The telecom lobby group also said that procuring components from India should be considered as a ‘deemed manufacturer’ status, to qualify for government-driven procurement.
COAI’s Kochhar further said that it was important to put into perspective that for achieving export-led manufacturing in India, it was essential to strengthen India’s component ecosystem.
In June this year, the Department for Promotion of Industry and Internal Trade (DPIIT), in its order revised the Public Procurement Policy 2017, and to encourage domestic production, classified the local content under two categories that included Class – I vendors whose value addition is 50% or more locally, and Class – II suppliers whose local content stands at 20% or up to 50%.
The department, however, also suggested that the quantum of local content could be increased via partnerships with Indian suppliers.
Former DoT advisor RK Bhatnagar said that the government would unlikely to change any existing policy direction that was aimed to discourage multinationals to build software and design overseas.
“It is right time for global vendors to file IPR in India for next-generation technologies so that the local value addition may increase,” he said, and added that foreign companies could still qualify for state-driven orders under Class-II with reasonable pricing.
Bhatnagar further said that Jio’s push for homegrown 5G technology would provide impetus to the government’s self-reliance initiative.
However, COAI has sought a revision of procurement policy, and asked DoT to constitute a task force to study the current status of Indian telecom manufacturing, IP-creation, R&D investment through direct visits and assessments of various global and Indian equipment makers facilities in the country.