Date:07/07/2003 URL: http://www.thehindu.com/2003/07/07/stories/2003070704211200.htm

National

Relief likely for indigenous telecom system vendors

By Sandeep Dikshit

NEW DELHI JULY 6. The Government is taking steps to solve the problems facing vendors of indigenous telecom systems who feel they have been neglected at the cost of their foreign counterparts.

In the first phase, the Government plans to resolve issues pertaining to procurement of equipment by the two state-owned telecom companies, the Bharat Sanchar Nigam Limited (BSNL) and the Mahanagar Telephone Nigam Limited (MTNL), official sources said.

The more difficult part of fulfilling the promises made in the New Telecom Policy '99 such as providing incentives to phone companies if they buy equipment from Indian companies would be taken up later.

A policy initiative on this aspect is considered challenging as the Government would be put on a collision course with foreign vendors who have cornered a major share of the telecom equipment market over the past few years.

The new package for indigenous companies includes timely payment to companies making prompt delivery of equipment, advance publication of annual requirements to allow them plan their production schedule, no change in eligibility criteria once the tender is announced and the setting up of an arbitration panel to cut down on time-consuming and costly court cases.

Officials feel easing up of procedures should help companies focus more on framing strategies to corner a substantial chunk of the market estimated at Rs. 20,000 crores worth of hardware and software for the telecom sector over the next four years. The move comes at a time when the mortality rate of small and medium Indian telecom equipment manufacturing companies has increased.

This is a far cry from the time when public and private Indian companies had helped the country become self-reliant in the area of switching systems and cables. Even the world's major multinational companies were forced to enter into manufacturing JVs with Indian companies.

In other product categories also, significant manufacturing and some R & D investment had taken place.

The industry has appreciated the attention paid by the Government to the equipment-manufacturing sector after a long time but feels the real issues have not been addressed.

Imports have been rising steadily and would continue to do so because of imminent reduction of import duties to zero level by 2005.