The Department of Telecommunications (DoT) has reportedly incorporated a clause in the latest public procurement policy order to ensure preferential treatment to domestic companies that achieve scale and capacity of such products to boost manufacturing of locally developed 5G technology products.
The move will allow local companies to have an edge over their global counterparts in public sector contracts for 5G gear procurement.
While issuing the draft guidelines on public procurement with preference to ‘Make in India’ rules, the DoT had identified 36 products that must have over 50 per cent local value addition to be eligible for procurement by the central government and its affiliated entities. However, 5G products were excluded from the list, on which local players raised concerns.
The DoT has now notified the final rules, incorporating the clause around local 5G products. The government has taken note of the fact that 5G products with indigenous technology are currently being tested in the country.
Currently, the list of products where the minimum local content has to be over 50 per cent include routers, ethernet switches, media gateways, customer premises equipment, gigabit passive optical network (GPON) equipment, satellite phones and terminals, optical fibre and cable, and telecom batteries.
Further, on certain products, the minimum local content must be 65 per cent. The list will be modified when local firms start large-scale manufacturing of 5G products. Tightening the norms and pushing Make in India in July, the government had excluded imported items sourced locally from resellers and distributors from the calculation of local content.
Besides, royalties, technical charges paid out of India and supply of repackaged and refurbished goods were excluded from the calculation of local content as per the order issued by the Department of Promotion of Industry and Internal Trade.
The 36 products identified by DoT have sufficient local capacity and local competition. In public procurement, preference is given to class-I suppliers. In case, the class-I supplier (i.e. a supplier whose goods and services offered for procurement have at least 50 per cent local content) is not able to supply, class-II supplier (i.e. supplier has at least 20% local content) will be given a chance.
