DoT seeks sops to boost local telecom gear manufacturing

The Department of Telecom has prepared a six-point agenda to be given to the Commerce Ministry to boost local manufacturing in the telecom sector thus improving the export-import balance of the country.

This includes giving deemed export status to local telecom equipment suppliers, inclusion of SAARC region under focus market scheme and zero duty structure for parts and components used for manufacturing.

The Commerce Ministry had sought DoT’s comments as part of its overall strategy to improve exports under the Foreign Trade Policy for 2013-14.

Currently, telecom equipment, including mobile phones, worth Rs 50,000 crore are being imported. To reduce the dependence on imports, the DoT is formulating a policy that will give preferential market access to equipment made in India. About 30 per cent of the overall requirements will be met through this policy.

Big challenge

According to the DoT, if domestic supply is considered as deemed export, this will be a boost to domestic manufacturers to set up plants in the country. “The deemed export status will allow the Indian telecom products industry to avail a low-cost working capital financing and other export-linked benefits available to exporters,” stated an internal draft DoT note to be sent to the Commerce Ministry.

DoT note stated that manufacturing and competing with imports at zero duty level is a big challenge. “It is essential to provide a rationalised tariff structure to the Domestic Tariff Area units wherein all inputs for manufacture of these items are also permitted for import at zero duty,” DoT paper stated.

The Department has also pushed for inclusion of telecom products under the focussed products schemes. Currently, the Directorate General of Foreign Trade is giving incentives for exports from India to certain priority sectors as 7 per cent whereas for telecom products, it is only 3 per cent.

“Indian companies face competition from global suppliers who are being backed by their countries Exim banks with low-cost working capital financing and other export benefits. This acts as a handicap to the Indian industry,” DoT note said.

The DoT wants the eligibility limit of Marketing Development Assistance scheme from Rs 15 crore to Rs 150 crore. Currently, this scheme focuses on areas such as Africa, ASEAN, Latin America and Iran with export up to Rs 15 crore eligible for subsidy. In telecom, Rs 15 crore is too low for any exporter and hence the DoT wants this to be raised to Rs 150 crore.

thomas.thomas@thehindu.co.in