India needs to develop a strong electronics base: Manmohan Singh .

NEW DELHI: India must strengthen its local manufacturing in electronics and communications as the country's import in these segments are set to outdo its petroleum imports by the end of the decade, Prime Minister Manmohan Singh said Thursday.

"India needs to develop a strong domestic manufacturing base in electronics and telecommunications. It is estimated that by 2020, India will be importing electronic products worth about $300 billion, which will be more than the value of our oil imports," Singh said while inaugurating the annual India Telecom summit.

"We need to act now to avoid a situation where we face difficulties in financing these imports. India should have manufacturing facilities which result in a balanced trade in electronics products and are a part of global supply chains," he added.

In order to boost domestic sourcing, the government is developing its local manufacturing ecosystem through the Preferential Market Access policy that mandates government departments to procure more than a dozen kinds of equipment locally.

India's economic woes have been compounded by a wide current account deficit, fuelled by high crude oil and gold imports, with electronics and communications goods imports fast catching up. The deficit in turn is pressuring the rupee. ET recently reported that New Delhi has already finalised the disbursal flow of a Rs 10,000-crore fund to promote local telecom gear manufacturing, of which a whopping Rs 9,000 crore will be channelled to Indian telecom product companies.

Prime Minister Singh added that the country's telecom operators would have to focus on increasing rural teledensity, which has been one of the key goals of the National Telecom Policy (NTP) 2012, which recognises telecom and broadband connectivity as a basic necessity. According to the NTP, India aims to increase rural teledensity to 70% by 2017 and 100% by 2020, from the current 40%. The government recently approved a scheme to reduce the difference and create connectivity in remote locations. The Universal Service Obligation Fund will extend financial support to cover 56,000 villages, keeping those in the North Eastern region of India on priority.

India's debt-ridden telecom industry has been battling with regulatory uncertainty for over a year. Now with reducing competition and pricing parity coming back to operators, fortunes of the industry are beginning to look up. Singh added that the government has further helped the industry by increasing the foreign direct investment levels to 100% and started issuing unified licences to operators who won spectrum in recent auctions.

The government intends to hold the third round of airwaves auction in January next year and Telecom Secretary MF Farooqui told reporters, on the sidelines of the event, that the Notice Inviting Applications, a legal document which lays downs the rules and regulations of the auction, will be released within 15 days. He added that the upcoming round will see auction of only 2G airwaves in 1800 MHz and 900 MHz bands, with around 45MHz or airwaves units in Delhi, Mumbai and Kolkata in the latter category.

In the previous auction rounds, 42.5 MHz spectrum in 900 MHz band was put up for sale but remained unsold as high base price kept bidders at bay and mobile phone companies opposed refarming proposed by the government.

He, however, was non-committal on the timing of auction of bandwidth in the 800 MHz band that supports CDMA operations, saying it will depend on the TRAI's recommendations on deciding the base price. Farooqui added that the government was also undecided on the timeline for holding auctions of the 2300 MHz band, which supports high speed data, or 3G services.

Source : economictimes.indiatimes.com