Telecom department plans to relax local content requirements under Make in India policy

The Department of Telecommunications (DoT) plans to review its public procurement policy (PPP) with preference to the Make-in-India (MII) order issued in October last year, in a bid to incorporate more products and likely relax local sourcing requirements.

While issuing the guidelines for the PPP Make-in-India order last year, the DoT had identified 36 products that must have over 50% local value addition to be eligible for procurement by the Central government and its affiliated entities.

Since 5G products were excluded from the list, the DoT had incorporated an enabling provision to review the products from time to time.

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As per the DoT’s notice seeking stakeholders’ comments, it proposes to review its PPP-MII order dated October 21, 2024, specifically for aspects concerning the list of products notified under the order, product-wise local content (LC) requirement including the ceiling of LC for design, conditions of inputs (including design) to be qualified as LC, and criteria for calculating LC for software products.

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“Multiple reports (NITI Aayog, Trai, MAIT, PLI companies etc.) indicate that India’s limited component ecosystem poses challenges in achieving 50–60% LC in electronic/telecom products. Recognising this constraint, the conditions for LC qualification also require a review,” the DoT notice said.

Currently, the list of products where the minimum LC has to be over 50% includes routers, ethernet switches, media gateways, customer premises equipment, GPON equipment, satellite phones and terminals, optical fibre and cable, and telecom batteries.

While tightening the norms and pushing Make-in-India, the government had excluded imported items sourced locally from resellers and distributors from the calculation of LC. Besides, royalties and technical charges paid out of India, and the supply of repackaged and refurbished goods were excluded from the calculation of LC.

In the case of public procurement, preference is given to class-1 suppliers. If a class-1 supplier is not able to supply, a class-2 supplier is given a chance.

All companies making products under the production-linked incentive (PLI) scheme for telecom equipment would be treated as class-2 suppliers. A class-1 supplier has to have 50% LC, while a class-2 supplier needs 20% LC.

“Any recommendations for the inclusion of new products or exclusion of existing ones must be substantiated with detailed justification, including verifiable data such as a list of major manufacturers, estimated LC value (%), annual production capacity, domestic sales and exports/imports (with figures), sales to public sector entities, etc.,” the notice added.

Stakeholders can send their comments within 30 days.

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