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Preferential market access policy put on hold

Only Government-run operators will implement localization, till further notice

The Prime Minister's Office has decided to defer the extension of the controversial policy of Preferential Market Access to private telecom operators. This comes after mounting pressure from global trade associations and the domestic telecom industry.

The preferential market access (PMA) policy mandates a phased increase in procurement from domestic industry. It will now be implemented only by state-run enterprises and not private telecom companies.

The meeting on this subject was attended by National Security Advisor Shiv Shankar Menon, principle secretary Pulok Chaterjee, cabinet secretary Ajit Kumar Seth, telecom secretary MF Farooqui and department of information technology (DIT) secretary J Stayanarayana.

A notification issued by the department of telecommunications (DoT) last October stipulated that telecom operators should give preference to telecom products made in the country.

India's new telecom policy ( NTP 2012) says that domestic production should meet up to 80% of the country's telecom equipment requirement by 2020. The policy further states that India will provide preference to domestically manufactured products that have security implications, consistent with its commitments to the World Trade Organization (WTO).

Through this policy, which was approved by the Cabinet in February last year, the government hopes to push manufacturing capabilities in the country to reduce dependency on imports, especially in strategic fields like defence and telecom. However, telecom equipment makers have been urging the government to suspend notification and clarify that the PMA policy will not be applied to private sector procurements.

Earlier, the PMO had raised these concerns with the DoT, questioning whether indigenous manufacturing at the cost of new and better products might lead to market distortions. It even suggested alterative measures to assuage the security concerns arising from import of telecom gear. Audits, certification and setting up standards to handle security issues and a dialogue with the industry were among the proposals made by the PMO to the DoT and the DIT.

Several international business lobbies, including the US-India Business Council, Digital Europe , Information Technology Industry Council, and the Telecommunications Industry Association of US, have warned that India's plans of extending the PMA provisions to private mobile phone companies would result in an unprecedented interference in the procurement of commercial entities.

They have also said the policy is inconsistent with India's obligations to the WTO. However, the government has till now defended the policy on the grounds that PMA would include products locally manufactured even by the multinationals and wouldn't be restricted to Indian companies.

From Economic Times

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