India pushes private telcos to adopt local gear amid rising geopolitical uncertainties

Time of India

2 days ago

India is encouraging private telecom operators to increase their use of locally-made equipment due to geopolitical concerns. This push could negatively impact foreign telecom gear makers like Cisco, Nokia, and Ericsson, while benefiting local manufacturers such as Tejas Networks and HFCL.
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Quality concerns
New Delhi: India is starting to push private telecom operators to use more local equipment in their networks, spurred by rising geopolitical uncertainties If implemented fully, this could hurt US-based Cisco, Finland's Nokia, Sweden's Ericsson and Korea's Samsung, among other foreign telecom gear makers. Local manufacturers such as Tejas Networks HFCL , Sterlite and VVDN stand to gain.People aware of details told ET the Department of Telecommunications (DoT) has asked telcos to voluntarily augment share of locally-made equipment, failing which a mandate will be issued, forcing them to abide in a time-bound manner.Private telcos and DoT officials met, and "companies have been asked to submit a roadmap for use of indigenous equipment," said a person privy to the details. Bharti Airtel , Reliance Jio, and Vodafone Idea did not respond to email queries.With doubling of US tariffs to 50% especially, the government's aim is self-reliance and more local manufacturing.Notably, a DoT standing committee had earlier rejected recommendations by the Telecom Regulatory Authority of India (Trai) on use of indigenous products by private telcos. The regulator had proposed a licence fee rebate to private telcos for using local gear. This is currently being re-examined, with the government realising the urgency of becoming self-sufficient in a critical sector like telecom.According to industry officials, the telcos have in-principle agreed to DoT's ask but with certain conditions, such as availability of local equipment at prices competitive with foreign products, and of similar quality. The Centre is mulling the plan only for new orders and won't be seeking replacement of the existing telecom equipment as that would swell costs for the already financially-stretched telcos.An industry expert noted that while telcos may be asked to buy products from local firms, the latter cannot currently offer the same quantity and quality. '(State-run) BSNL (Bharat Sanchar Nigam Ltd) has been struggling in terms of quality and quantity because of this mandate. If BSNL is facing difficulties and challenges and if the same is imposed on private players also, it will lead to problems for the entire telecom sector,' the expert said.Currently, private telcos are using limited local technology and equipment. Vodafone Idea, for instance, has been buying certain quantities from the likes of Sterlite Technologies, HFCL and Tejas, while Reliance Jio has been utilising inhouse equipment. Bharti Airtel too had agreed to buy from homegrown firms, but there have been supply constraints. 'We are happy to support as long as our business and commercial needs are met,' said an industry executive, asking not to be named.With telecom having national security implications, India's move to support local companies in this critical sector is not a novel initiative. China too mandates its operators to buy only from local companies.Over the past few years, India has made its intentions clear to become self-sufficient in telecom gear manufacturing. BSNL has already been mandated to use equipment only from local firms and the telco's 4G network was rolled out by a consortium comprising C-DoT, Tata Consultancy Services and Tejas. The same strategy will be followed for the 5G network with only local firms supplying. A similar strategy will be applied to private telcos in a timely manner, the people said. 'The government will take a call which categories of telecom equipment would be prioritised for indigenous manufacturing and the same can be mandated,' one of the persons said.