KOLKATA: The export prospects of India’s domestic telecom equipment makers like Tejas Networks, Himachal Futuristic Communications, Coral Telecom, Shyam Telecom and ITI could soon receive a shot in the arm. Telecom secretary MF Farooqui is set to nudge the Ministry of External Affairs (MEA) to help domestic telecom gear makers win export contracts in overseas markets, especially in Africa and Saarc nations.
Farooqui will urge the foreign ministry “to mandate embassies to help Indian telecom gear companies facing problems in securing contracts in international markets,” according to the minutes of a recent telecom department meeting seen by ET.
Senior DoT officials and representatives of top local telecom gear makers, including Tejas, Coral Telecom, Vihaan Networks, Himachal Futuristic Communications, Shyam Telecom, ITI, Birla Ericsson and Alphion India attended this meeting.
The decision to seek foreign ministry intervention was taken after it was pointed out in the meeting that unlike the Chinese consulate, which lobbies aggressively for Chinese telecom vendors to win contracts across global markets, the Indian embassies in overseas locations were not doing much to help Indian telecom gear makers bag orders from foreign companies.
The DoT envisages telecom equipment exports in calendar year 2014 to hit the Rs 24,000-crore mark, thrice the Rs 8,000-crore level achieved six years ago. But those in attendance in the Farooqui-chaired meeting felt that export momentum could hit a much higher growth trajectory by tapping into the huge demand for telecom infrastructure products in the neighbouring Saarc markets and Africa.
The move to boost telecom gear exports comes at a time the government is striving to keep India’s current account deficit under check. The widening gap in the previous years had weakened the rupee against the dollar, leading to higher inflation at a time the economy has been in the doldrums.
Key suggestions made to beef up India’s telecom exports were “better utilisation of available lines of credit and pitching India as a world class telecom manufacturing hub at upcoming global telecom conventions in Israel, Brazil, South Africa and Australia” later this year, the note added.
In an earlier note, the DoT said Indian telecom vendors were primarily hamstrung by competition from global suppliers who are backed by their country’s EXIM banks offering low-cost working capital financing (Libor + 2%) and other export benefits.
The telecom department has already approached the commerce ministry seeking special treatment for domestic telecom gear makers by way of incentives to withstand competition from overseas suppliers in a largely import-centric environment. It had called for “deemed export status” to 17 categories of telecom products to help local vendors access low-cost working capital and other export-linked benefits to complement the government’s thrust on domestic telecom manufacturing.
At present, foreign telecom vendors are reluctant to set up full-scale manufacturing units in India as they have repeatedly told DoT that the cost of manufacturing in India is 22.5% higher than in China.
This was recently discussed at a meeting of the Telecom Equipment Manufacturing Council (TEMC), which comprises DoT officials and representatives telecom service providers, network vendors and IT firms. The TEMC has been mandated to explore ways to encourage global vendors to transfer technology to Indian suppliers, nurture a vibrant components ecosystem and review local value addition targets.
(Source: The Economic Times, March 10, 2014)