The U.S. telecom industry has urged the Indian government to reevaluate its policies with regard to capitalization requirements and telecom licences application fees as the latter reduces the amount of resources available to service providers to invest in building out their networks and connecting India’s vast population.
“TIA urges India to reevaluate the basis for license application fees, capitalization requirements and bank guarantees as it applies to telecommunications service provider licences,” the Telecommunications Industry Association said in a memorandum submitted to the U.S. Trade Representative.
TIA stated that the body is concerned over discriminatory policy proposals that India is contemplating aimed at increasing manufacturing and innovation in the ICT sector, and that this signals a reversal of the generally open-market and pro-competitive policies India has taken in this sector.
“Specifically, TIA and its members are very concerned about the recommendations proposed to the Department of Telecommunications by the Telecommunications Regulatory Authority of India to encourage domestic manufacturing of telecommunications equipment in India. Preference policies, quotas, and other trade barriers run counter to the market opening reforms that India has implemented and which provided the catalyst for the unprecedented economic growth the country has experienced in recent years,” the letter says.
The letter further states: “TRAI bases its recommendations on establishing a preference program for domestically manufactured products on a belief that government licensed entities, including private telecommunications service providers, can be treated as government entities as it relates to their procurement practices. This assertion is clearly contradicted by the WTO’s rules, which state under Article III of the General Agreement on Tariffs and Trade (GATT) that generally requires that imported products be treated no less favorably than domestic products. The TRAI recommendations’ assertion that entities licensed by the government can be categorized as ‘government’ for the purposes of procurement policies is not supported by the WTO.”
“In addition to the negative consequences for meeting India’s ICT connectivity goals and hampering its ability to benefit from global collaboration, these policies run counter to India’s longstanding international trade commitments under the WTO, its national treatment obligations under the GATT, and its G20 pledge in 2008 not to increase barriers to trade,” TIA states.
The industry body also refers to a proposal drafted by India’s Planning Commission that would require 30% of all electronic procurements by the government to be reserved for domestically manufactured products. The said proposal is under review of the Indian Cabinet but if implemented, it will undermine the country’s ability to innovate, and will impose discriminatory and unrealistic requirements on companies seeking to sell to the Indian government, TIA argues.
“The proposal will increase the Indian government’s own costs by restricting procurement options, and will violate critical commitments that the Government of India has made to resist trade and investment protectionism,” TIA’s letter states.
The letter also notes that India continues to be one o the world’s fasted growing ICT markets despite global economic slowdown.
Since 2006, India’s total wireline and wireless telephone subscribers have increased from approximately 164 million to over 846 million, representing almost 416% growth in five years.
Broadband (> 256 kbps) has grown over 500% since August 2006 to over 11 million subscribers, yet numbers of connections remain low relative to the population.
