‘Mere R&D and creation of IPR will not result in 80% local production by 2020’
How is TEMA pushing the telecom manufacturing in the country?
In the last 3-4 months, we have realized that a lot needs to be done for inclusive growth in the telecom industry. In terms of statistics, we have mobile subscriptions of more than 800 mn, but as far as equipment manufacturing is concerned, we are virtually negligible. For example, the import of infrastructure equipment is in the range of ` 50,000-` 60,000 crore whereas the Indian domestic manufacturing is in the range of ` 1,000 crore only.
Both in NTP’94 and NTP’99 policy, we find that the government was conscious about manufacturing of domestic products and it also talked about India becoming self-reliant in the telecom manufacturing and also catering to the whole world. NTP’11 is focused on R&D and manufacturing and it also talks about 30% local sourcing in the first year and gradually achieving 85% by 2020. This is all good, but the concern is that what is the roadmap to achieve it? By 2020, our import bill in telecom will become ` 250,000 crore and it will be 4 times the oil import bill. So, it is important to achieve our goals and do not miss out for any reason as it will leave us far behind.
How can we achieve 80% local production by 2020?
Mere R&D and mere creation of IPR will not result in 80% local production by 2020. R&D has to mix up with commercialization and the two has to go together. Therefore R&D will require special impetus and there should be carrot-and-stick policy. We at TEMA, are recommending 5% cess to be collected from the operators in India to boost R&D. At the same time the approach of carrot is that those buying local products will be granted this concession.
Another important aspect of achieving the desired goal is to provide market access, whereby in purchase of government hardware, preference should be given to domestic product. The government is utilizing USO fund for increasing teledensity and the caveat can be that domestic products will be deployed for USO projects. Support from the government is that it is discounting the disability factor which the Indian manufacturer is ceased with and this is in the range of 14-15%. The cost of the fund in some countries are negligible or 2-3% and there is zero duty too. On the other hand, the Indian manufacturer is posed with all sorts of taxes like municipal tax, octroi tax, and central sales tax (CST). So, the whole cost comes around 22%.
There is always an excuse that components are not available locally. So, how are we going to achieve 80% by 2020?
We are requesting DOT to depute a team to know how this system works and give further impetus. The need today for the government is to accelerate the speed with which decisions are taken or we will miss the bus. If we don’t act right now nothing will be left for manufacturing. Once the people realize that there is ` 250,000 crore opportunity and the government is promoting domestic manufacturing, many giants who are not focused in telecom will also jump.