Global equipment manufacturers call for sweeping changes to
calculation of value addition norms.
Global telecom
equipment vendors have urged the government to make sweeping changes to the
method of calculating value addition norms, so that they are eligible for
government contracts under the public procurement policy for the Preference
to Make in India (PMI) scheme.
The scheme mandates preference for domestic products in public-funded projects.
The letter, sent to the DoT a few days ago through the Cellular
Operators Association of India (COAI) is critical for two reasons. Without
a change in value addition norms, global vendors such as Nokia, Ericsson, and
Samsung will not be able to participate in the upcoming RFP for 4G equipment to
be bought by BSNL and MTNL.
In case of no
change, telecom gear makers will be deterred from further investing in
manufacturing and exports from the country, despite the government wanting them
to invest more, especially by moving some of the manufacturing from China to
India.
In the October 29
letter, the COAI asked for other factors to be included when value addition
norms are calculated. For example, telecom gear makers could be given a higher
weight for their large R&D investments, as well as for the costs they incur
on maintaining and servicing warranties.
It asked for a
scientific study on the Indian manufacturing poweress in telecom and networking
to ensure a competitive market, where current local manufacturing capacity
should be 50 per cent of the Indian market size of the product.
The COAI also
demanded that firms be given credit under the public procurement policy (PPP)
for the PMI scheme for components they source from India for their factories
abroad. Further, manufacturing firms that adopt an export-led model should be considered
to be ‘deemed domestic’ and given credits under the revised policy.
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