In a move that is likely to give a massive boost to Indian industry, the government is planning to make it mandatory for all telecom service providers to procure a minimum 30% of their equipment from local manufacturers.
The main idea behind the move, according to sources, is to take care of security-related concerns raised by the intelligence agencies.
The new policy will come into effect on April 1. The government will issue the relevant notification soon, the sources said.
An expert committee constituted by the department of telecommunications (DoT) has identified certain products such as SIM cards, Network Management Systems (NMS), base stations, and switching centres among the electronic items that are important for security reasons and should be manufactured in India.
"For telecom licences (public and private), the effective date proposed is April 1, 2013, and preferential market access starts in the first year with minimum 30% with a value addition of a minimum 25% and maximum 45%," the committee said.
The Telecom Equipment Manufacturers' Association (TEMA) has assured the communications and IT ministry that the local industry has the capacity to manufacture these items, and furnished a list of manufacturers that own patents in the relevant fields.
The domestic industry has welcomed the move. "We have been demanding for long that the government encourage local manufacturing by making it mandatory to use locally produced equipment," said NK Goyal, chairman emeritus, TEMA.