Indian Telecom Industry’s Dispute Over Foreign Firms’ Domestic Manufacturing

• Indian telecom equipment manufacturers are concerned about the sops handed out by the Centre to foreign firms.

• The dispute is arising at meetings with the Department of Telecommunications, which is asked to balance increasing domestic manufacturing by global firms like Ericsson and promoting the growth of indigenous firms.

• One sticking point is foreign telecom gear makers like Ericsson’s potential qualification as Class 2 suppliers under the 2017 Make in India procurement order.

• Foreign firms are also seeking duty exemptions and relaxation for components not made in India or made in very small quantities.

• Domestic players have seen an opportunity to press their case at meetings in June with the DoT.

• Draft changes at the DoT to “local content rules for the telecom sector” under the 2017 public procurement rules encourage domestic manufacturers.

• Multinational corporations like Cisco and Ericsson are lobbying India’s DoT to ease local content requirements.

• The issue is that most work performed in India is done on an outsourcing basis for their foreign parent companies.

• A possible solution could be “differentiated credit systems where higher weight is given to Indian-owned IP and designs, domestic fabrication of critical components and in-country software with IP assignment to Indian entities.”