The Department of Telecommunications (DoT) has asked private telecom operators to increase the share of locally manufactured equipment in their networks, warning that a mandate could follow if they fail to comply. The move is aimed at boosting domestic manufacturing and reducing dependence on foreign suppliers amid rising geopolitical uncertainties.
Telcos Seek Price and Quality Parity
According to people familiar with the matter, Bharti Airtel, Reliance Jio, and Vodafone Idea have been asked to submit roadmaps for adopting indigenous equipment. While operators have agreed in principle, they have sought assurances on price competitiveness and quality comparable to foreign products. The plan will apply only to new orders, avoiding the replacement of existing network gear to limit costs for financially stressed telcos.
People aware of details told Economic Times that the DoT has asked telcos to voluntarily augment share of locally-made equipment, failing which a mandate will be issued, forcing them to abide in a time-bound manner. Private telcos and DoT officials met, and "companies have been asked to submit a roadmap for use of indigenous equipment," a person was quoted as saying in the report.
Impact on Foreign and Domestic Suppliers
If implemented, a shift towards domestic procurement could hurt foreign telecom gear makers such as Cisco, Nokia, Ericsson and Samsung, while benefiting local firms including Tejas Networks, HFCL, Sterlite Technologies and VVDN. At present, private telcos use limited local technology — Vodafone Idea sources some gear from Sterlite, HFCL and Tejas; Reliance Jio uses in-house equipment; Airtel has agreed to buy from Indian firms but faces supply constraints.
"We are happy to support as long as our business and commercial needs are met," an industry executive was quoted as saying.
According to industry officials cited in the report, the telcos have in-principle agreed to DoT's ask but with certain conditions, such as availability of local equipment at prices competitive with foreign products, and of similar quality. The Centre is mulling the plan only for new orders and won't be seeking replacement of the existing telecom equipment as that would swell costs for the already financially-stretched telcos.
Concerns Over Capacity and Quality
An unnamed industry expert cited in the report noted that while telcos may be asked to buy products from local firms, the latter cannot currently offer the same quantity and quality. "(State-run) BSNL (Bharat Sanchar Nigam Ltd) has been struggling in terms of quality and quantity because of this mandate. If BSNL is facing difficulties and challenges and if the same is imposed on private players also, it will lead to problems for the entire telecom sector," the expert reportedly said.
BSNL as the Test Case
The government is considering prioritising certain categories of telecom equipment for indigenous production. BSNL has already been mandated to source exclusively from domestic suppliers for its 4G and upcoming 5G networks, a model the Centre intends to extend to private operators.
"BSNL has already been mandated to use equipment only from local firms, and the telco's 4G network was rolled out by a consortium comprising C-DoT, Tata Consultancy Services and Tejas. The same strategy will be followed for the 5G network, with only local firms supplying. A similar strategy will be applied to private telcos in a timely manner, the report quoted sources as saying.
"The government will take a call which categories of telecom equipment would be prioritised for indigenous manufacturing and the same can be mandated," one of the persons reportedly said.
