June 10, 2023

Telecom Equipment From Government Certified Sources Only

By Ashwini Agarwal
First publised on 2020-12-18 08:01:10

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After India had banned mobile apps originating in China over security concerns, it was logical for it to do the same for telecom equipment manufacturers. Since these decisions are being taken keeping the security of the nation in mind, it makes sense to have a list of "India trusted source" for procuring telecom equipment.

The telecom sector, apart from allowing people to stay in touch with each other and the outer world, also serves as the backbone of the modern economy as well as the defense services. Hence, it is necessary that such supplies come from trusted sources. There are many ways faulty or engineered telecom equipment can disrupt services and cripple the economy and not all Chinese companies can be trusted in this regard. The recent cyberattack on Australian networks is fresh in public memory.

With the country on the verge of advancing to 5G networks, care has to be taken to ensure that the new backbone is not exclusively dependent of Chinese suppliers. Although Chinese products are cheaper, reliability is an issue and it cannot be overlooked. The cost of setting up the backbone will go up for the companies as they will now have to source their material from European, American or Korean suppliers.

But that is a small price to pay for having a robust and trustworthy network that will be immune to data breaches and cyberattacks. Given the importance of telecom networks for the economy and the security apparatus, even the smallest slip can turn out to be very costly. Hence, the government must be commended for taking measures to identify and list reliable companies which can supply equipment to telecom networks in India.

But will Indian companies be able to absorb the additional cost (which is going to be substantial)? They are already suffering huge losses and will also have to pay the disputed AGR dues over the next 10 years? Profit margins are also very thin as India has the lowest telecom tariff in the world. The market is also very competitive. The government should work out a financial package for the sector to enable it to keep up with technological advances and maybe rework the licensing agreements to exclude other income from AGR to give the companies some breathing space.