Global telecom vendors likely to meet local value-addition targets

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wirelesstelecomgearMonday, September 01, 2014: Telecom department is set to introduce some strict norms to ensure that local value-addition targets are sincerely met by foreign telecom vendors. These norms will help the vendors getting government contracts under the preferential market access (PMA) policy.

Global vendors will have to “declare VA (value-addition) levels under a self-certification system” with “penalties in case of false declarations and incentives for compliance”. An internal government note, noticed by Economic Times, has written this point. Local value-addition will be applicable in imported telecom gear before getting tagged as ‘Made in India’. These VA levels will be supervised by DoT’s technical wing, the Telecom Engineering Centre, and the Standardisation Testing & Quality Certification directorate.

The PMA policy will have a key element – the proposed self-certification system – and it also calls for minimum 30 per cent local sourcing of security sensitive technology products. These products are meant for government contracts including all ministries except defence. Excluding the armed forces, all central ministries and departments, will obtain a “declaration from all procuring agencies within their administrative control” every year. Consultations are going on to finalise the local VA targets for 23 security-sensitive technology products, as revealed by a top DeitY official.

These targets and deadlines will be fixed after an analysis of the global network vendors and how they can handle absence of a mature local manufacturing ecosystem, the official said, on the condition of anonymity. A recommendation was made by the previous government that global vendors should meet 45 per cent target by 2017 and 65 per cent by 2020. But this suggestion was not accepted by trading bodies in the US, Europe and Japan. They have maintained that India’s local manufacturing ecosystem remains virtually non-existent for the main telecom products. This limitation restrains a foreign vendor’s ability too to meet the aggressive VA targets under the PMA policy, as suggested by the previous government.

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