The Ministry of Commerce has raised objections to giving preferential access to Indian telecom equipment manufacturers.
The Ministry has said that such a move would be against international trade norms. The Department of Telecom is planning to bring in a new policy to encourage local manufacturing of network equipment.
Equipment procurement
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. When the policy is announced, telecom companies, both private and public sector, will have to buy 30 per cent of their hardware from those that have manufacturing base in the country or face penalty. This goes up to 80 per cent by 2020.
However, the Commerce Ministry has said this would be against the provisions of General Agreement on Tariffs and Trade (GATT) and the agreement on Trade-Related Investment Measures.
“Article 21 of the GATT providing for security exemptions may be invoked but there would be difficulties as telecom equipment usually form part of a network. To suggest that by domestically manufacturing 35 per cent or 80 per cent of the telecom equipment, security concerns like protection from malware, denial of service etc can be achieved is an argument that may be difficult to sustain,” said a communication from the Ministry to the DoT.
This is the first time an Indian agency has opposed the move by DoT. Earlier, trade representatives from Europe and US had raised concerns against such a policy on similar grounds. If the policy goes through then foreign equipment makers such as Nokia Siemens, Ericsson and Alcatel Lucent will have a tough time.
The European Commission had told the Communications and IT Minister, Mr Kapil Sibal, that the move to give preferential treatment to domestic manufacturers of telecom equipment raised questions about India's commitment to open and fair conditions of doing business.
Similar concerns
The US Government had also raised similar concerns over this issue earlier as the proposed policy will also impact American manufacturers such as Cisco, HP, Motorola and Dell.
On the other hand, local manufacturers are pushing for more concessions in the proposed policy. According to the Telecom Equipment Manufacturing Association of India, the Government should be concerned about the huge import bill arising out of importing telecom gear.