Local Sourcing Rules Might Not Be Applicable To Private Telecom Companies

Thursday, August 01, 2013: An internal document of Department of Electronics & IT higlighted the fact that India is planning to exempt private telecom companies from local sourcing rules. But, the local sourcing rules still apply to equipment that are required for projects classified as ‘security sensitive’ by the government, reported The Economic Times.

Apart from this, the government is also proposing to change a controversial clause in the draft Preferential Market Access (PMA) policy. The clause mandated that both state-owned telecom companies as well as private mobile phone operators were required to progressively buy any ‘security sensitive’ gear from local telecom gearmakers.

The proposed relaxation of PMA provisions follow the Prime Minister’s Office (PMO), putting the policy on hold and calling for a review after continuous protests from over 50-odd global trade associations and domestic telecom industry bodies.

According to the groups, extension of PMA rules to the private sector would lead to market distortions because the Indian telecom industry is dependent on imports to meet its requirements. Efforts were on by the Indian government to restrict the import of telecom gear to control India’s import bill as the country’s telecom equipment imports increased nearly 34 per cent to Rs 56,421,000 in the year 2012-13 from Rs 42,249,000 in 2009-10.

Once the final version is notified by the Department of Electronics & IT (DeiTY), it will imply that likes of Bharti Airtel, Vodafone India, Idea Cellular, Tata Teleservices, Uninor or Reliance Communications can import electronics for their own network expansion.

Nearly 14 categories of electronics have been identified by the telecom department (DoT) as having security implications, hence, these have to be sourced locally between 2014 and 2020 on the basis of their grade of security concerns.

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