The Telegraph
Since 1st March, 1999
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Telecom equipment firms face dragon fire

New Delhi, Nov. 17: Telecom equipment makers have pressed the panic button after being scalded by the fiery Chinese dragon that has muscled into their turf.

The telecom equipment makers are frantically knocking on the doors of the government to rein in the rampaging Chinese companies that have undercut them on prices.

They have suggested that the government lay down a rule for telecom service providers making it mandatory for them to buy a part of their total equipment from the domestic market.

They have also demanded that duties, on components used in telecom products with major export opportunities, should be reduced.

The Telecom Equipment Manufacturers Association, the apex body of telecom equipment manufacturers in the country, has already made a representation to the finance and commerce ministries.

“We have emphasised that it is important to have a policy that will make it binding for the telecom service providers who are setting up their networks or those who procure instruments like mobile and land-line phones to purchase equipment from the local manufacturers. This is a policy that has been followed in China and its benefits are visible,” says TEMA president Narendra Kumar Goyal.

“If local manufacturers can be given the necessary duty exemptions, we can bring down the cost of equipment to the level that is being flooded from China. Due to low duty cost, the Chinese manufacturers have surplus equipment that they can export to countries like India at a lower cost,” said Goyal.

Telecom service providers—both private operators and the government-owned Bharat Sanchar Nigam Ltd (BSNL)—feel that if the equipment supplied by local manufacturers meet the same standards and are available at the same price, then the demand for local equipment will certainly go up.

The Chinese telecom and IT equipment makers have already joined hands with a few local manufacturers here to sell their products.

Huwai and ZTE are two leading telecom and IT equipment manufacturers and software developers who have tieups with Himachal Futuristic Communications Ltd (HFCL), ARM, a Hyderabad-based company, and United Telecom Ltd.

“These companies only have a distribution agreement and do not give the technology to manufacture in India. This aspect also needs to be examined by the government, so that the technology is transferred to the manufacturers in India,” said Goyal.

Meanwhile, Tema has urged the government to set up a Telecom Finance Corporation on the lines of the Power Finance Corporation to help the local manufacturers raise necessary funds at low rates.

“A committee of experts should be formed to identify the sources of funding including government funding, multilateral and bilateral assistance, institutional financing, market borrowing, internal resources and private investment. The government can contribute the seed money while the other banks and financial institutions could contribute to the corpus. This will help us with some financing facility,” said Goyal.

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