The Commerce Ministry has asked the Department of Telecom to study the subsidy model followed by the Chinese government for supporting telecom services in that country.

This follows a report by the Indian Council for Research on International Economic Relation (ICRIER) stating that Indian government lag behind its Chinese counterpart when it comes to incentivising the telecom sector.

The study was commissioned by the Commerce Ministry to derive insights and takeaways for India from the cross country subsidy practices across various services and to highlight good practices and innovative schemes that could form India’s own subsidy schemes.

“India’s subsidies in telecom are several years behind those of China and going forward there is a need to synergise product and service development in an integrated way like China has done,” the ICRIER report said.

India’s telecom subsidy schemes with regard to product development, indigenisation of technology and R&D are relatively incipient and are yet to be implemented, it said.

The report said the financial support given by the Chinese Government to its companies have made players like Huawei a competitive challenge to Indian players in the services segment.

While India offers subsidy support through schemes launched by the Universal Service Obligation fund, these are primarily related to rural connectivity. “Rationalisation of taxes, tax incentives and developing integrated infrastructure and sale, do not appear to have been the focus of these subsidies thus far, despite demands for the same from industry,” the report said.

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