New Delhi, Jun 3 (PTI) Foreign telecom equipment makers have asked the government to ease the preferential market access rule for their investments to be made under the proposed product-linked incentive scheme, a suggestion opposed by local companies.

The Department of Telecom is considering a product-linked incentive scheme for promoting telecom equipment manufacturing on the lines of Rs 50,000 crore scheme by the Ministry of Electronics and IT for mobile handsets and parts.

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The DoT held a meeting on Wednesday with senior executives of three global telecom gear majors -- Nokia, Ericsson, Huawei -- as well as domestic players like Tejas Networks, HFCL, Vihaan Networks Ltd, and Paramount Communications, to seek their views.

According to sources, DoT incentive scheme is proposed to have a corpus of Rs 10,000 crore. The meeting was chaired by DoT additional secretary Anita Praveen.

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"Any company that is manufacturing telecom equipment in India should be considered as an Indian manufacturer and they should be given weightage under Preferential Market Access policy in public tenders," a senior executive of a foreign firm said.

Foreign firms jointly pushed for lowering local value addition in telecom equipment that will be produced in India as no Indian company makes critical components like electronic chips which account for major cost of a product.

"We are ready to source components from Indian companies but many of the components required for telecom equipment are not made in India. Therefore, local value addition should be brought down. Domestic companies show product design and IP as a major cost which helps them in qualifying for PMA," another executive said.

The PMA rules mandate central government departments to give preference to domestic manufacturers and has notified rules to identify indigenous companies based on local purchase done by them for manufacturing a product.

Domestic telecom gear makers body TEMA said that the PLI scheme should be for indigenous design developed manufactured products and not for assembly.

"The Telecom PLI should however be available for domestic production that may be for domestic consumption or exports," Telecom Equipment Manufacturers Association of India (TEMA) said in a statement.

The industry body said that 100 per cent imported components must be avoided for value addition eligibility norms.

PHD Chamber of Commerce and Industries' telecom committee chairman Sandeep Aggarwal said all 36 items which come under the PMA rules should be included under PLI.

"The government should make it mandatory for all major private players that at least 50 per cent of their electronic equipment purchase and 100 per cent of their cables requirements should be from Indian manufacturers," Aggarwal said.

He said that when private telecom operators are taking incentives from the government and benefitting from the public projects, then they should also be compelled to purchase bulk of their requirements from Indian manufacturers.

Talking about low value addition in absence of critical components manufacturing base in India, Aggarwal said, "The government needs to proactively support the semiconductor fab industry.

"It should be made mandatory for mobile and other electronic manufacturers to source from Indian fab. Starting with 10 per cent it could go up to 70 per cent in the next few years."

The Meity has notified a Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) to attract electronic chip makers in to India.

Under the scheme companies will get 25 per cent incentive on their capital expenditure. The government has set an investment range of Rs 5 crore to Rs 1,000 crore for companies willing to set-up electronic components plants under the scheme.

All telecom gear makers commonly agreed that the investment  limit under the proposed PLI should be not more than Rs 50-80 crore as equipment are meant for business-to-business supplies only.

They have also agreed that incremental sales value every year should be less as the telecom equipment are sold at large intervals for building robust networks.

(This is an unedited and auto-generated story from Syndicated News feed, LatestLY Staff may not have modified or edited the content body)