Telecom operators must source bulk of hardware locally: TRAI

The Telecom Regulatory Authority of India (TRAI) has proposed making it mandatory for mobile phone companies to source 80 per cent of their network equipment and other infrastructure from domestic manufacturers, according to a report.

This includes the networks produced by manufacturing units of foreign vendors located in India.

The move is aimed at boosting domestic output in this strategic sector and ensuring that India becomes a manufacturing hub for telecom hardware, according to a report in The Economic Times.

The sector regulator wants the government to ensure that companies owned by Indians and located in India get 50 per cent of all telecom network orders by 2020, the report adds, without mentioning its sources or saying when the TRAI recommendations were sent.

By implication, TRAI wants the manufacturing arms of international vendors such as Ericsson, Nokia Siemens, Alcatel-Lucent and Huawei amongst others to account for only 20 per cent of all equipment orders by 2020. Besides, TRAI also wants telecom hardware imports to be restricted to 20 per cent of the country's total requirements, the report says.

If the department of telecommunications accepts TRAI's recommendations in its upcoming policy to promote domestic manufacturing, it will have serious repercussions on foreign vendors, the report points out.

 India is the world's largest market for international vendors - the market for telecom equipment is expected to grow from $12.5 billion in 2009-10 to $40 billion in 2020, by TRAI's projections.

Currently, locally manufactured telecom hardware accounts for a mere 12-13 per cent of the requirements by mobile operators. Of this, Indian companies account for a mere 3 per cent, TRAI estimates reveal.