Telecom Regulatory Authority of India (TRAI) has proposed the development of a Rs. 1,000 crore fund aimed at facilitating research and innovation within the telecom sector. This recommendation is part of a broader effort to transition the Indian telecom equipment manufacturing sector from an import-dependent industry to a global hub for indigenous manufacturing. This proposal comes in the face of growing imports, decreasing exports, and fierce competition from countries like China, known for their large-scale production of low-cost telecom equipment.
Competitive Challenges in the Indian Telecom Sector
One primary reason behind the significant increase in imports and decrease in exports is intense competition from countries such as China. Notably, China is globally renowned for its large-scale production and export of low-cost telecom equipment. Other significant contributors to the import market include countries like Sweden, Finland, and the United States.
Security Concerns and the Call for Indigenous Manufacturing
TRAI has underscored the need for manufacturing telecom equipment in India. This move is expected to alleviate security concerns arising from overwhelming dependence on foreign-made goods. The focus on domestic production is seen as a crucial step towards ensuring greater control and security in the rapidly expanding telecom sector.
Key Recommendations from TRAI
The authority has outlined several key recommendations. Firstly, it encourages India to achieve net zero imports of telecommunications equipment by 2022. As of 2017-18, the export of telecom instruments stood at $1,201.7 million, contrasting starkly with imports totaling $21,847.92 million.
Further, TRAI insists on mandatory testing and certification of all telecom equipment in the country. It also suggests the creation of the Telecom Research and Development Fund (TRDF) to foster research and innovation in the sector.
Dedicated Unit for Monitoring Telecom Equipment
TRAI has recommended the establishment of a dedicated unit within the Department of Telecommunication (DoT). This unit’s primary responsibility would be the facilitation and monitoring of telecom equipment design, development, and manufacturing of indigenous telecommunication equipment.
Incentivizing Telecom Service Providers
On one hand, TRAI suggests that Telecom service providers (TSPs) be incentivized to use indigenous telecom products. On the other hand, it recommends setting up the Telecom Entrepreneurship Promotion Fund (TEPF) and the Telecom Manufacturing Promotion Fund (TMPF). These funds would enable the private sector to effectively participate in manufacturing indigenous equipment and facilitate market access for locally made gear.
Financial Options for Indigenous Telecom Manufacturers
TRAI urges the DoT to collaborate with the Ministry of Finance to make financing options available to indigenous telecom equipment manufacturers. These options could include venture capital in the form of equity and soft loans, project finance, and contract financing options.
Other Recommendations
The authority also recommends the development of a portal for self-loading and declaration of Standard Essential Patents (SEPs). In addition, it proposes instituting an Alternate Dispute Resolution Framework for timely resolution of patent licensing disputes. All telecom products meant for use in the telecommunication network or by consumers should be classified as either fully finished imported products or indigenous products.
Opposition from Telecom Firms
Despite these recommendations, some telecom firms have expressed opposition to TRAI’s proposal for a Public Wi-Fi model. These companies believe it could disrupt the current business dynamics. However, TRAI maintains that these reforms are crucial for fostering innovation, enhancing security, and promoting indigenous production within India’s telecom sector.
