Trai calls for import duties on some telecom gear
India as a signatory to the World Trade Organisation’s ITA-1 has a zero-duty commitment on 217-odd electronic items in the list.
India as a signatory to the World Trade Organisation’s ITA-1 has a zero-duty commitment on 217-odd electronic items in the list. But it is under no obligation to allow duty-free imports of ICT items outside the ITA-1.
Accordingly, the Telecom Regulatory Authority of India (Trai) on Friday has proposed that “an expert group be constituted to identify telecom products not covered under the provisions of ITA-1, and suggest suitable levels of import tariffs to give an immediate push to the development of indigenous telecom equipment manufacturing”.
The suggestion forms a key element of Trai’s recommendations to the telecom department (DoT) on ways to boost local manufacturing of telecom gear as India still imports 90% of its requirements. The DoT will take a final decision on the matter.
“Indigenous design and manufacturing of telecom products not included in the ITA-1 should be incentivised, and once the ecosystem matures, local manufacturing of telecom products covered under the ITA-1should also be encouraged,” Trai said in its recommendations.
Import of telecom instruments and electronic items, it said, is far greater than exports of such items, which is why, “India should aim to achieve an objective of net zero imports of telecom equipment by 2022”. Citing data collated by the Directorate General of Commercial Intelligence & Statistics, Trai said India imported a whopping $21.8 billion of telecom instruments and exported only a modest $1.2 billion in FY18. Similarly, it imported nearly $7 billion of electronic instruments and exported a modest $2.1billion in FY18.
The sector regulator has particularly recommended local manufacturing of network gear such as switches, routers, base stations, multiplexing gear, antennae, noting that these “costly items are mostly imported” now.
“Local manufacturing of network equipment will reduce imports and create self-reliance and job opportunities,” the regulator said.
Sanjay Nayak, CEO of homegrown networks gear maker Tejas Networks, said “Trai’s recommendations are bold, and with proper implementation, India can become a global powerhouse in the new data and 4G/5G world”.
The regulator, he said, “has reiterated the importance of having strong domestic telecom product design and manufacturing, in this strategically important sector, which has security as well as major forex outflow implications”. At press time, global network vendors Nokia, Ericsson, Huawei and ZTE did not reply to ET’s queries on Trai's recommendations.
The regulator has also mooted a Rs 1,000 crore fund to promote research, innovation, standardisation design, testing, certification and manufacturing of indigenous telecom gear.
It also suggested creation of more funds for promotion of telecom entrepreneurial and manufacturing, and attracting the private sector.
It has also suggested that DoT and the finance ministry come up with additional funding avenues for indigenous telecom gear makers in step with “practices followed by other export-oriented economies”.
It has proposed a clutch of options such as VC financing by way of equity/soft loans, project finance, contract finance to credit default insurance.