The Department of Telecommunications (DoT) will bar the central government, state governments and public sector undertakings (PSUs) from procuring certain telecom equipment from telecom companies of countries that do not allow Indian telcos from participating in procurement of telecom equipment, according to an official order, dated February 19. The order comes after the Department for Promotion of Industry and Internal Trade (DPIIT) had prepared a Public Procurement (Preference to Make in India) Order 2017 to promote manufacturing and production of goods and services in India (more on that below). MediaNama has seen a copy of the order, and news agency PTI also reported on it. Here’s what the DoT order said:
“… any foreign Government which is not allowing Indian suppliers to participate and/or compete in procurement of telecom equipment, provision of clause 10(d) of Public Procurement (Preference to Make in India) Order, 2017 be invoked in relation to the aforesaid telecom items identified in para 4 herein above.”
Equipment covered under the order: The telecom equipment that is covered under the DoT order has eight items, such as 2G/3G/4G/LTE modems, optical fibre, and routers:
- SDH/Carrier-Ethernet/MPLS- TP/Packet Optical Transport equipment/PTN/OTN systems
- Wireless/Wireline PABXs & IP PBX
- GPON/XGS-PON, NG-PON2 equipment (including ONT and OLT)
- CPE (including Wi-Fi Access points and Routers, Media Converters), 2G/3G/4G/LTE Modems
- Optical Fibre Cable
- DWDM/CWDM systems
- IP/MPLS Core routers/ Edge/ Enterprise Router
- Wi-Fi based broadband wireless access systems (Including Access Point, Aggregation Block, Core Block), Integrated Broadband system
DoT said that the 8 items were shortlisted following consultations with the domestic industry and government procuring agencies, and that it should “find clear and specific mention in any telecom equipment procurement tender floated by any government/PSU procurement agency”.
What DPIIT’s 2019 order said: Clause 10(d) of the DPIIT order, from May 2019, said that if a nodal ministry found that Indian suppliers of an item were not allowed to participate or compete in procurement by any foreign government, it can restrict or exclude bidders from that particular country from procuring that item, or other items relating to that nodal ministry. A supplier or a bidder would be considered from a particular country if i) it was incorporated there, or ii) majority of its shareholding is exercised from a particular country, or iii) more than 50% of the value of the supplied equipment was generated in a particular country.
Why this matters: This development comes after India allowed companies from around the world, including China’s Huawei, to participate in India’s 5G trials, scheduled to take place this year. Indian telcos Bharti Airtel and Vodafone Idea have both reportedly partnered with Huawei to submit their 5G bids.
- It also comes ahead of US President Donald Trump’s visit to India. The US has been a vocal critic of Huawei, and has been engaging with countries, including India, urging them to not allow Huawei in their 5G network. In December 2019, the country had warned India of the “risks” posed by Chinese-made networks to the “treasured freedoms”. A few months before that, it had also written to the Ministry of External Affairs “warning” India that Indian companies that supply American-origin products could face severe punishment.
- In May 2019, the US Commerce Department had added Huawei and 70 affiliates to its ‘Entity List’, which prevented the company from buying components from US companies without the government’s approval. The enormity of the decision soon became clear when Google cancelled Huawei’s Android licence, and chipmakers Intel, Qualcomm, Broadcom and Xilinx suspended shipments to the Chinese company. The US’ core concern is Huawei’s close relationship with the Chinese government and fears that its equipment could be used to spy on other countries.