India to pay out INR100bn to local vendors

28 Oct 2013

The Economic Times writes that the government has finalised plans for the disbursement of INR100 billion (USD1.63 billion) to promote the local production of telecommunication equipment, of which INR90 billion will be funnelled into Indian companies. The fund is a key part of the country’s strategy – outlined in National Telecommunications Policy 2012 (NTP 2012) – to promote research and development (R&D) in the sector and to integrate India into the international telecommunications equipment ecosystem as a major hub for manufacturing and design. Of the fund, INR60 billion will be disbursed as interest subsidy to help Indian firms to access cheap working capital, whilst INR10 billion will be handed out as loans to enable companies to meet initial product development and commercialisation costs. INR12 billion was set aside to cover marketing and export-related expenses and INR10 billion will be used to incentivise local operators to buy ‘Made in India’ products from local manufacturers. The Department of Telecommunications noted that: ‘Most telecom original equipment makers in India are foreign companies, and there is a clear paucity of financial incentives for indigenous development of telecom products unlike in the case of the Indian software industry.’

The DoT hopes to elevate India’s status in the telecoms equipment market by leveraging its massive domestic wireless market. According to TeleGeography’s GlobalComms Database, India was home to the second largest mobile market in the world at end-June 2013, with 870.51 million mobile subscribers at that date, behind China’s 1.18 billion but more than double third-placed US which claimed 309.38 million.

India, Department of Telecommunications (DoT)