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The telecom industry is seeking incentives in order to deploy indigenous equipment in their networks. Amongst the top three operators, there is a consensus that telcos should be given the flexibility to be able to purchase equipment from global vendors such as Nokia, Ericsson, etc.
Meanwhile, in order to nurture an indigenous ecosystem in the long term, telcos believe that the government may consider an incentive-based approach. However, making procurement of indigenous networking and telecom equipment mandatory is discouraged by telecom operators.
Jio, which is developing its own indigenous 5G stack, told the Telecom Regulatory Authority of India, “We are supportive of the concept of Preferential Market Access for domestic manufactured products and believe that it can be an effective tool for promoting Indian Products.” However, the telco believes that operators should not incur a penalty for not being able to purchase Indian products. “PMA policy should be in the form of a nudge intervention that ensures positive reinforcement and influences the behaviour by way of incentivising through preferential market access” said Jio.
In agreement with Reliance Jio, Bharti Airtel said, “TSPs should be allowed to procure/use all products i.e. globally available or indigenous manufactured, so as to have the latest equipment and network system as per technological advancement. While flexibility for procurement of NATE should be retained with the TSPs, the government may consider an incentive-based approach to encourage procurement of indigenous NATE by TSPs. In such NATE procurement cases, an exemption of GST on the procurement of NATE may be provided as an incentive.”
Vodafone Idea further added, “ Telecom operators should be encouraged through graded incentives of reduction in license fees, for procurement of domestically manufactured products.” However, Vi noted that these incentives must be applied to both Indian as well as Foriegn suppliers that manufacture locally.
Domestic network equipment makers were more specific regarding the type of incentives that they want in order to encourage the idigenous ecosystem.
Stricter incentive mechanism
The Telecom Equipment Makers Association (TEMA) pointed out that while license conditions specify telcos to follow Make in India, guidelines such as these are not followed because of lack of incentive.
Therefore, TEMA is seeking a stricter incentive mechanism, where a service provider procuring more than 10 per cent of the market access requirement of telecom equipment in the form of Indian manufactured products should get a rebate equivalent to 10 per cent of its license fee for that year and the service provider procuring more than 20 per cent of its telecom equipment requirementshould get a rebate equivalent to 20 per cent of its license fee for that year.
However, TEMA also seeks a penalty in case telcos do not fulfill this market access requirement, “if a service provider is not able to meet the criteria of market access, then it will deposit an amount equal to 10 per cent of the shortfall in the value of the equipment in the Telecom Research fund or the Telecom Equipment Manufacturing.”
Boosting domestic units
Vihaan Network Limited proposed that a 5 per cent R&D cess be imposed on TSPs to create a corpus for supporting R&D for technology development in the telecom sector & when TSP start buying Indian products, this R&D cess should be reduced proportionately.
Coral Telecom, which has applied under the production linked incentive scheme for the manufacture of telecom equipment, also added, “ Incentives to Telecom Service Providers Market pull or demand for products manufactured by industry is the single most important factor to resurrect industry. Ensuring that TSPs adopt domestic products will be a great boost in that direction” in the meantime the company urged the government/ state agencies to purchase more telecom equipment that qualifies under the GOI’s 2017 PPP MI order, which was formulated in order to promote manufacturing and production of goods, services and works in India with a view of enhancing income and employment.
Tejas Networks want telcos to be given an incentive as high as 50 per cent on Make in India products.
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