The US Government has raised concerns over a number of India's telecom related policies. Its objections include the preferential treatment given to telecom and electronic products made in India under a new manufacturing policy.
The policy has been approved by the Committee of Secretaries and awaits the Cabinet's final ratification.
This policy will have a major impact on a number of American technology firms, including Cisco, Motorola, HP and Dell. The US has asked the Ministry of Commerce to clarify whether the proposed manufacturing policy meets the terms and conditions laid out under the WTO. The US has objected to bringing procurement by private companies within the ambit of the new policy.
The Ministry of Communication and IT had floated a proposal to reserve 30 per cent of all electronic equipment procurement to items manufactured in India. This includes telecom gear and IT peripherals.
When the policy is announced, telecom companies, both private and public sector, will have to buy 30 per cent of their hardware from those who have manufacturing base in the country or face penalty.
The move is in line with the recommendations of the Telecom Regulatory Authority of India and a committee formed by the National Manufacturing Competitiveness Council.
The US has asked, “Could India please clarify how the preference regimes for domestic purchases carried out by private sector enterprises that are licensed by the Government qualify as ‘products purchased for Governmental purposes' so as to constitute government procurement under the terms of the GATT Article III-8a?”
The US has asked this as part of the fifth Trade Policy Review of WTO. Under international trading protocols, WTO members are not allowed to give protection to local products except when procured by governmental agencies.
However, the Department of Telecom thinks it would be unfair to ask only the State-run companies to buy from Indian manufacturers in a competitive sector such as telecommunications.
The US has also raised concerns over such issues as the monopoly of the Indian Space Research Organisation for supplying direct-to-home satellite services.
It has asked India to clarify the need for such a policy and whether there are any plans to follow an open-sky policy in satellite services. American companies like Hughes have been keen to sell satellite capacity directly to customers in India instead of routing through ISRO.
It has also sought an update on the TRAI recommendations on giving equal access to cable landing stations in India to foreign companies. A number of US long-distance carriers including AT&T, Verizon and Sprint offer services in India.
The Commerce Ministry has asked the DoT to respond to these questions which will be then sent to the US along with issues raised on other sectors.