Govt gets Rs1,770-cr investment proposals from Indian telecom firm

The government has received a Rs1,770 crore investment proposal from an Indian company for the manufacturing of telecom products, the PTI reported yesterday.

''Our policies have attracted investors. The aim of the government is to reduce dependence on imports,'' Department of Electronics and Information Technology (DEITY ) joint secretary Ajay Kumar said, adding that it has received total investment proposal worth Rs1,770 crore so far for manufacturing telecom products..

However, Kumar has not disclosed the name of the firm.

''The application is in process and is expected to be approved by inter-ministerial panel within a month,'' the news agency quoted Kumar as saying.

The Telecom Regulatory Authority of India (TRAI) had earlier made it mandatory for mobile phone companies to source 80 per cent of their network equipment and other infrastructure from domestic manufacturers (See: Telecom operators must source bulk of hardware locally: TRAI). http://domain-b.com/industry/telecom/20110414_operators.html

The DEITY under National Policy on Electronics 2012 and further strengthened by National Telecom Policy 2012 has so received investment proposal of Rs4,595 crore for electronics manufacturing which includes telecom and IT products.

The proposal by the domestic company is the biggest among proposals that the government has received so far for indigenous manufacturing, an analyst said.

''The government has come up with good policies but recent rethinking by it on Preferential Market Access (PMA) policy is enough to shake investor's confidence. Telecom sector has already seen dip in investments due to regulatory uncertainty,'' he added.

The cabinet approved the PMA policy in February last year seeking to give preference to domestically manufactured electronic products which have security implications and for government procurement also.

The prime minister's office (PMO) has put on hold the policy, and said that it will 'revisit and review' the entire policy on providing preference to domestically manufactured electronic goods.

According to TRAI, only 12 to13 per cent of all local products made with the aid of foreign vendors were used in the sector during 2009-10. However, purely India-made products formed just 3 per cent of the market.

Out of the total investment proposal received for domestic manufacturing, government has cleared proposals worth Rs961 crore which include investment from Bosch Electronics, Samsung and an Indian firm Sahasra Electronics.

Some of the other investment proposals include Rs450 crore for manufacturing of consumer electronics, Rs310 crore LEDs and LED products, Rs45 crore for electronics components, Rs610 crore automotive electronics, Rs40 crore power electronics, Rs210 crore strategic electronics and Rs750 crore for semiconductor test and packaging.

According to government statistics, the electronics demand in the country is expected to touch $400 billion by 2020. Unless domestic manufacturing is  incentivised, the country's electronics imports could reach $300 billion by 2020.

At present 74 per cent to 100 per cent FDI is permitted for various telecom services. 100 per cent FDI is permitted in the area of telecom equipment manufacturing and provision of IT enabled services. This has made telecom one of major sectors attracting FDI inflows in India.