New Delhi: The Department of Telecommunications (DoT) is set to revisit its public procurement policy aligned with the Make-in-India (MII) initiative, signalling a possible expansion of the product list and a relaxation of stringent local content (LC) norms.
This move comes in response to industry concerns over the challenges of achieving high levels of domestic value addition in telecom and electronic equipment manufacturing.
The DoT has issued a notice seeking inputs from stakeholders on the Public Procurement (Preference to Make in India) Order dated 21 October 2024.
The department intends to review key provisions of the policy, including the list of notified products, LC thresholds for individual products, qualification criteria for design inputs as local content, and the method used to calculate LC in software products.
In its 2024 guidelines, the DoT had mandated that 36 telecom products must have a minimum of 50 per cent local value addition to qualify for government procurement. These include routers, ethernet switches, GPON equipment, optical fibre, telecom batteries, satellite phones and terminals, among others.
However, 5G products were not included in the list at the time. The original order included a provision for periodic review of the notified products, a clause that the DoT is now invoking.
Citing studies from bodies like NITI Aayog, TRAI, MAIT and production-linked incentive (PLI) beneficiaries, the DoT noted that the limited availability of locally manufactured components has made it difficult for manufacturers to meet the 50 to 60 per cent LC threshold.
As a result, the government is reconsidering the current LC qualification conditions to better align with India’s actual manufacturing ecosystem.
The policy currently differentiates between Class-1 and Class-2 suppliers. Class-1 suppliers must meet the 50 per cent LC requirement and are given procurement preference. Class-2 suppliers, such as those participating in the telecom PLI scheme with a minimum 20 per cent LC, are considered only when Class-1 suppliers are unavailable.
Notably, the policy excludes from LC calculations any imported items sourced locally through resellers, payments for overseas royalties, and repackaged or refurbished products.
As part of the ongoing review, the DoT has also invited proposals for new products to be included or removed from the PPP-MII list. Such recommendations must be backed by comprehensive data, including production capacities, domestic sales, import-export figures, and existing supply to public sector bodies.
Stakeholders have been given 30 days to submit their feedback on the proposed changes.
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