Parts makers want telecom companies in government access policy

NEW DELHI: Domestic telecom equipment makers are seeking inclusion of private telecom operators under the government’s preferential market access policy, saying the move will help push sales.
The preferential market access (PMA) policy mandates all state departments, organisations and agencies to procure at least 30% of their equipment from the domestic market. Following intense lobbying, the government had exempted the private sector from such a restriction.
In the country’s Rs 50,000-crore telecom equipment market, local players such as Tejas Networks, Vihaan Networks Ltd (VNL), Himachal Futuristic Communications Ltd (HFCL) and Matrix Comsec together hold only about 5% share. The rest is hogged by Nokia Networks, Ericsson, Huawei and ZTE.
Domestic manufacturers complain that they have not been able to increase market access despite having cheaper products. They claim that some government-run organisations are reluctant to buy their portfolio, forcing their production facilities go underutilized. To try and level the playing field, they want PMA policy to be extended to private operators as well.

"There should be government support through incentives for design in India to facilitate the ambitious ‘Make in India’ programme, as imports are constantly outpacing exports in the country," Telecom Equipment & Services Export Promotion Council (TEPC) director general RK Bhatnagar said, adding that local equipment manufacturers find it hard to get market access in both government and private segments.
TEPC is demanding that the scope of the PMA policy should be increased to cover private business too. The group, citing industry estimates, said that nearly 95% of telecom gear and allied products are being imported with domestic players not only losing out in the local market but are operating under intense pressure with exports declining.
Minister of communications and IT Ravi Shankar Prasad recently said that in 2014-15, the country imported telecom equipment worth Rs 89,929 crore, up more than 32% from the previous fiscal.
"Despite the PMA policy being notified, we see challenges in the implementation by certain government buying agencies. It is ironical that at times, the industry had no option left but to take a legal route to get the PMA policy enforced," said Sanjay Nayak, cofounder and chief executive of Tejas Networks.
Nayak, however, feels that government departments such as DeitY and DoT should ensure that projects such as BharatNet and ‘Smart Cities’ have high degree of domestic value-addition and Indian proprietary technologies so that domestic products can be promoted. This, according to him, will help Indian companies reach economies of scale, which only comes when they get large business volumes.
"As the government is aiming to promote domestic manufacturing in the electronic industry to control the ever-growing import bill, it is most significant that design in India is strongly encouraged and supported," said Sanjeev Kakkar, president and chief strategy officer at VNL.
Kakkar believes that unless there is enhanced value addition in the telecom sector domestically, companies cannot build local competence and an overall ecosystem in the evolving technological area in this sector is strategic to the nation.