After the department of telecom (DoT) cancelled BSNL's 4G upgradation contract this week, sources privy to the developments told CNBC-TV18 that a fresh tender will be launched once the DoT appointed committee submits its recommendation on the upgradation requirements.
“The committee will submit its recommendations by the July 14. Post that a fresh tender will be launched with new requirements. The committee is mulling the security concerns raised by the government on Chinese equipment makers. One of the key roles of the committee is to determine if Chinese companies should be banned from the tender. What it decides will set a precedent on future tenders, especially from BSNL and MTNL as well," said a senior DoT official that did not want to be named.
Huawei and ZTE are the key Chinese players that have a stake in the Indian equipment eco system and have been working closely with not just BSNL but all the private players including Bharti Airtel and Vodafone Idea.
An eight member committee had been appointed by the DoT which comprised of three members of DoT, directors of IIT Kanpur, IIT madras, a representative of the National Security Council secretariat and a director each of MTNL and BSNL. The committee is to give recommendations on the 4G upgradation of both government run telecom companies BSNL and MTNL.
Sources said the committee is also considering if the tender should include PMA (Preferential Market Access) norms. Preferential market access will give a pricing advantage to domestic companies applying for the tender and will be a negative for not just Chinese companies but also US companies like Nokia, Ericsson and Samsung. The committee is also considering mandating a 40 percent local sourcing rule for the BSNL tender added the official.
"Most global companies like Nokia and Ericsson have started to manufacture in India. However, they are expected to have a 20-40 percent local sourcing component. A 40-50 percent local sourcing mandate in these tenders will make it difficult for foreign equipment makers to be eligible and will even reduce the competitiveness of the contract," said a senior source from a global equipment firm.
The move is seen as a way to increase domestic equipment manufacturing, something that companies like Sterlite Technologies, VNL and Tejas Networks that compete in these contracts, have been asking for.