The government is likely to insist on 100 per cent domestic sourcing for three major telecom projects worth nearly Rs 360 billion, shutting off foreign vendors who were hoping to bag a chunk of these contracts, says an Economic Times report.
Citing security concerns, the telecoms ministry has decided to approach the Union Cabinet seeking its approval for keeping foreign vendors out of ‘sensitive projects’.
This includes the Rs 200 billion initiative to lay optic fibre connecting all panchayats in the country, the Rs 150 billion project to build an alternate communication network for the defence forces and the Rs 6 billion secure network that is being built to ensure confidentiality between government departments across the country.
Besides, the telecoms department has also decided that all future telecom projects funded from the Universal Service Obligation kitty must include 100 per cent indigenous equipment.
In a related development, the telecoms department has also dismissed concerns raised by the commerce ministry and issued a cabinet note seeking approval for its proposed policy that will give preferential access and tax cuts to indigenously manufactured telecoms equipment.
This policy also mandates that both state owned and private mobile phone companies buy up to 80% of their networks hardware from domestic companies by 2020.
The commerce ministry had warned that any move to preferential market access to domestically manufactured products would violate the provisions of the Trade Related Investment Measures (TRIMs) agreement under the World Trade Organization trade treaty of which India was a signatory.
It had further added that providing subsidies to use domestically manufactured equipment was against the principles of the Agreement of Subsidies and Countervailing Measures (ASCM).
But the telecoms ministry has said that the Cabinet had already cleared the department of information technology guidelines for procurement, which gives preferences to domestically manufactured electronics products.
These rules mandate a 30 per cent reservation of all electronic components for domestic manufacturers for all government procurement, including PSUs). The DoT has argued that a similar policy covering both private and state-owned mobile phone companies is vital to boost domestic manufacturing.