As per the report in the Economic Times dated 21-3-2012, the Commerce Ministry wrote a letter on 12-3-2012 to the Secretary, Telecom Department stating that the proposal of the Telecom Department in the draft of the National Telecom Policy 2011 for granting preferential access to the domestic telecom equipment manufacturers is against the WTO (World Trade Organisation) agreement to which India is a signatory.
The draft national telecom policy fixed the target that by the year 2020, 80 per cent of the demand for telecom equipment should be met by the domestic manufacturers with the value of 65 percent of the equipment added in India. The draft policy has made this proposal for encouraging domestic manufacture of the telecom equipment. At present, 90 percent of the demand for the telecom equipment in India is met by imports. The draft national policy also held the view that encouraging the domestic manufacture of equipment with the technology developed domestically in India is necessary in the interest of national security. This proposal in the draft national telecom policy is based on the recommendation of the TRAI.
But the Commerce Ministry raised the objection to this proposal on the ground that as per thee WTO agreement signed by India, such preferential treatment cannot be given to the domestic equipment manufacturers and no condition should be imposed for procuring the equipment from domestic manufacturers only. The telecom companies procuring thee equipment for the expansion of their network should be left free to procure the equipment from which ever vendor they prefer, whether Indian or foreign.
The European Union, USA and Japan already raised objection to this proposal of the draft national telecom policy for encopuragin domestic manufacture. Recently the US Assistant Tradee Representative (South & Central Asia wrote a letter to the Telecom Department against this preferential treatment to domestic manufacture.
But the point to be noted is that even the draft national telecom policy says that the preferential treatment to the domestic equipment manufacturers is subject to the international commitments of India. So the international commitment is the WTO agreement signed by India banning any preferential treatment to domestic manufacture and the draft national policy commitment is to give preferential treatment to domestic manufacture!
The only way to come out of this problem is to nationalize the telecom services since the WTO agreement is not against the procurement by Government companies from domestic manufacturers. Otherwise India will remain a technologically dependent country in telecom sector inspitee of the tremendous growth in the number of telecom subscribers, with a permanent possibility of threat to its national security due to the imported equipment.