Local Telecom Suppliers Raise Concerns Over Tender Norms: Impact on Industry and Market Dynamics 2023

Local Telecom Suppliers Raise Concerns Over Tender Norms: Impact on Industry and Market Dynamics 2023

standards of several ministries even though the government has collected over Rs 2,300 crore in investment under the telecom output linked incentive programme.

According to some with knowledge of the situation, the local businesses said that government offices prefer buying equipment from huge international corporations, which limits their ability to develop.

Local gear manufacturers have accused several ministries of manipulating and abusing the public procurement (preference to Make in India) policy at a meeting with representatives from the Department of Telecommunications (DoT) and the Department for Promotion of Industry and Internal Trade (DPIIT).

According to the policy, the ministries are required to buy products from regional suppliers. Although some ministries have strict requirements for corporations to participate in the tender, this effectively excludes local enterprises from the scope of the offer.

For instance, the qualifying requirement was varied in one of Northern and Western Railways’ tenders. One of the railway zones wanted the enterprises to have provided 1,000 units up to this point, while others requested a higher 15,000 units, which is impractical for smaller companies. A greater turnover requirement of Rs 100 crore was also a requirement for qualifying.

According to reliable sources, these issues have been brought up before. DPIIT urged the ministries to fully abide with the public procurement policy earlier in January as well. The problem affects not just the local telecom companies, but also businesses involved in the pharmaceutical, textile, and car component industries.

DPIIT has once again warned several departments to abide with the public procurement regulations. One of the instructions was to verify with the telecom department to see if the equipment was available locally before any ministry purchased any telecom equipment.

One of the problems brought up in the meeting was the usage of certain Wi-Fi devices in Chandrayaan-3, for which HP was granted the go-ahead despite local manufacturers producing such devices in India.

The government should begin imposing heavy sanctions on the affected ministries and authorities in the event of any violations of the public procurement regulation, according to an executive with a domestic equipment company.

“This is ironic since on the one hand, the government talks highly of boosting value addition and supporting local players. Another executive at a local company added, under the condition of anonymity, “just look at the loopholes and gaps in the implementation of policy.” According to the official, domestic businesses may only benefit from export opportunities if they want to continue operating.

Similar concerns about the government e-marketplace (GeM) and the admission of compromised equipment from unreliable sources were reportedly brought up separately to DoT by local participants.

42 enterprises will spend a total of Rs 4,115 crores, generate additional revenues of Rs 2.45 trillion, and add more than 44,000 jobs over the course of five years under the telecom PLI plan. Beneficiaries include businesses like Coral Telecom, Dixon, HFCL, ITI, Lekha Wireless, Tejas, Samsung India, Vihaan Networks, etc.

The firms have so far spent Rs 2,230 crore and made Rs 28,724 crore in sales.

The telecommunications industry plays a critical role in connecting individuals, businesses, and communities across the globe. In any country, the telecom sector is not only a vital part of the economy but also a driving force behind technological advancement and innovation.

As governments and organizations continually seek to enhance their communication infrastructure, the procurement of telecom equipment and services through tenders becomes a significant aspect of industry growth. However, recent concerns raised by local telecom suppliers regarding tender norms have brought attention to potential challenges that could impact the industry’s dynamics and local players.

Telecom tenders are a structured way for governments and organizations to acquire the necessary equipment, systems, and services required to build, maintain, and expand their communication networks. These tenders typically cover a range of products and services, including networking equipment, mobile devices, fiber optics, software solutions, and more. By setting specific requirements and guidelines, tendering processes aim to ensure transparency, competition, and quality in the procurement of telecom infrastructure.

Local telecom suppliers are companies that provide products and services within the telecom industry and are based in the same country as the tendering entity. They play a vital role in promoting domestic industries, creating jobs, and contributing to economic growth. However, recent changes in tender norms have raised concerns among these local players.

One of the primary concerns raised by local telecom suppliers is the perceived bias towards multinational companies in the tendering process. Some argue that the tender norms favor large international players who might have more resources and bargaining power, thereby potentially sidelining smaller local suppliers.

Strict requirements and prerequisites set in tender norms can create barriers to entry for smaller local companies. This can hinder innovation and limit the growth potential of emerging players within the domestic market.

Tender norms often specify particular technologies, standards, or brands. While this can ensure compatibility and interoperability, it might exclude innovative solutions offered by local suppliers that could bring unique advantages to the table.

Innovation is a driving force behind the telecom industry’s evolution. If tender norms stifle the ability of local suppliers to introduce novel solutions, it could slow down technological progress within the country.

If local telecom suppliers are marginalized due to tender norms, it can have economic implications such as job losses, reduced tax revenue, and increased dependence on foreign products and services.

Addressing the concerns raised by local telecom suppliers requires a balanced approach that considers both the growth of domestic industries and the broader telecom ecosystem.

Tender norms should be designed to accommodate a variety of suppliers, including local players. This might involve setting different criteria for larger international companies and smaller local businesses.

Tender norms could encourage innovation by incorporating clauses that reward suppliers for introducing cutting-edge solutions that align with the project’s objectives.

While ensuring compatibility is important, tender norms could provide flexibility in technology choices, allowing local suppliers to propose alternative solutions that meet the project’s requirements.

Governments and organizations can encourage collaboration between local and international suppliers, fostering knowledge transfer and skill development within the domestic industry.

Offer training and capacity-building programs to help local suppliers meet the technical and quality standards required by tender norms.

The concerns raised by local telecom suppliers over tender norms underscore the need for a balanced approach that supports both domestic industry growth and technological progress.

It is essential for governments, regulatory bodies, and organizations to consider the broader implications of tender norms on the telecom sector and take steps to create a level playing field that encourages innovation, promotes local industry development, and ensures the delivery of high-quality communication infrastructure. In doing so, the industry can thrive while benefiting all stakeholders involved.