The Department of Telecommunications plans to classify mobile phones, modems and set-top boxes under a special category while allowing 100 per cent foreign direct investment (FDI) in single brand retail trade (SBRT). The special category implies that companies with 100 per cent FDI will have to mandatorily source 30 per cent of their components from local small and medium enterprises (SMEs).
DoT has made this suggestion in response to a proposal by the Department of Industrial Policy and Promotion (DIPP) to increase the FDI cap in retail.
In an internal note, DoT had stated, ?The opening of 100 per cent FDI in SBRT with 30 per cent mandatory sourcing from SMEs will boost manufacturing of customer premise equipment and phones in the country.?
However, the industry has not reacted favourably to this proposal. For instance, Pankaj Mohindroo, president, Indian Cellular Association said, ?Procurement of 30 per cent is not feasible for telecom and technology products and services. If at all, any such quota is to be established, it should be restricted to products made in India by any manufacturer not specifically by SMEs. In the value chain of telecom and technology products and services, the proportion of manufacturing by SMEs is miniscule and, therefore, any such restriction is not feasible.?
