India plans to boost manufacturing capacity in telecom networks, IT

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    Feb 16, 2009
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    India plans to boost manufacturing capacity in telecom networks, IT hardware to compete with China - The Economic Times

    NEW DELHI: India plans to undertake a five-pronged strategy to boost its manufacturing capabilities in telecom networks, IT hardware and electronics, and compete directly with China in this space. The telecom and IT departments share the view that major policy changes to kick-start large scale manufacturing in the country can create as many as 100 million jobs - directly and indirectly - by 2025.

    As the first step, the Centre had invited expressions of interest from both technology companies and investors for setting up two semiconductor fabricators in the country, while also outlining a full package of incentives.

    As per a confidential note circulated by the DoT, the Union Cabinet is also deliberating four other policy initiatives. These include incentives to companies to set up electronics clusters in towns, forcing all government departments to procure domestically manufactured products with regard to telecom, IT hardware and electronics, setting up an electronics development fund and a National Electronics Mission and also limiting telecom networks import to 20% of the industry's total requirement over an eight-year period.

    Security concerns are also behind the move to boost domestic manufacturing, especially of telecom networks. The DoT internal note, reviewed by ET, points out that the Intelligence Bureau had approached the cabinet secretary seeking that the country reduce its dependence on foreign vendors, enhance indigenous interception and monitoring capabilities and develop technologies locally.

    The draft Cabinet note mandating that 30% value terms for all government procurement should be 'Made in India' or Indian electronic products, has also been circulated to all ministries.

    This plan, which has the support of the National Manufacturing Competitiveness Commission and the Prime Minister's Office, will extend to tenders of all government ministries, PSUs, government controlled institutions, PPP-funded projects and projects under institutional funding from World Bank and Asian Development Bank, according to the draft proposal.

    The DoT's internal note also adds that the draft Cabinet notes for setting up a national electronics mission and the introduction of special incentives for setting up electronic manufacturing clusters, were already under inter-ministerial consultation. The ministry is also finalising the detailed project report for setting up a dedicated 'Electronic Development fund'.

    Additionally, the upcoming new telecom policy will also incorporate sector regulator Trai's recommendations that mobile phone companies be mandated to source 80% of their network equipment and other related infrastructure from domestic manufacturers by 2020. This also includes the networks produced by the manufacturing units of foreign vendors located in India.

    Trai had proposed that government to ensure that companies owned by Indians and located here get 50% of all telecom network orders by 2020.

    This implies that the regulator wants the manufacturing arms of international vendors such as Ericsson, Nokia Siemens, Alcatel-Lucent and Huawei amongst others to account for only 30% of all equipment orders by 2020. Besides, Trai also wants telecom hardware imports to be restricted to 20% of the country's total requirements. It had also charted out a timeline beginning 2015 to achieve these targets.

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