Inter-ministerial group may review PMA norms on telecom gear

KOLKATA: A high-powered group comprising representatives of the telecom department (DoT), the department of electronics & IT ( DeitY), the ministries of commerce, home and external affairs and the Prime Minister's Office (PMO) may soon review India's preferential market access (PMA) norms after leading US and European trade bodies and industry lobbies, representing GSM, CDMA and dual-technology companies, recently deplored the government's insistence on 100% domestic sourcing of telecoms gear on security grounds, top executives aware of the matter said.

But in the run-up to this, the Telecom Commission, the highest decision-making body of the communications ministry, is meeting on February 18 to review the PMA regulations which have been decried by international trade bodies as "coercive" and running contrary to global trade laws which threaten to undermine India's World Trade Organisation (WTO) treaty commitments.

The Telecom Commission is expected to soon issue a detailed memo of the meeting agenda. It is likely to discuss whether the PMA norms constitute obstructive and excessive intervention into the operations of global telecom network vendors in India.

Leading US trade bodies have recently claimed that invoking the national security bogey "as grounds for interference in private sector procurements of telecom gear can create a dangerous precedent for other countries to follow". The Telecom Commission may also re-look at proposed value addition targets of 14 categories of security-sensitive telecom equipment, which have been described by various telecom lobbies and international trade bodies as "extremely aggressive" and not in consonance with practical realisations and ground realities.

Simply put, "value addition" is the degree of customisation for Indian markets that will go into an imported telecom product using Indian resources. "The government will assess whether there is merit in the industry's demand for realisation of value-addition(VA) targets in a more staggered manner, given that local VA is linked to demand and availability of a manufacturing ecosystem," said an official with direct knowledge. In fact, a key discussion point could be assessing the pros and cons of allowing global telecom vendors to initially use local resources for assembly and testing, and progressively handling printed circuit board (PCB) assembling and eventually full-fledged local component sourcing.

Executives aware of the matter claim the TC's views will signal the shape of things to come, especially since the telecom department is fully aware that the present VA targets "have been left open-ended with no clarity on how companies would achieve a definite level of localisation on their first day of operation.

One of industry's major gripes is the fixing of stiff VA targets coupled with DoT's insistence on 100% domestic sourcing for telecom gear that is yet to be either launched in India or reach a defined level in terms of economies of scale. "It is difficult to figure out how the suggested level of domestic sourcuing and value addition were defined when things like LTE or WiFi-based broadband gear and IP/Hybrid/GPON systems are yet to rolled out on a pan-India basis," said a top executive of a leading international equipment vendor.

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