Friday, February 19, 2010

India - Time for a new PSU: Indigenous telecom equipment

[economic times] Even as the government goes ahead with disinvestment in a number of public enterprises, it needs to seriously think about setting up a new
stateowned enterprise (SOE), to make telecom network equipment. A new SOE, in this day and age of reform and liberalisation? Here is why we need one.

India needs indigenous telecom equipment manufacturing capability for long-term comparative advantage and to protect national security. India is the fastest-growing telecom market in the world, with crores of new entrants to the dynamic new India proudly announcing their arrival flaunting their mobile phones.

Billions of dollars worth of telecom equipment is bought by Indian companies on a regular basis. The orders go to Ericsson, Nokia-Siemens or Huawei, by and large. What these companies have in common, apart from being telecom equipment makers, is that they are non-Indian . There is no large Indian manufacturer of telecom equipment .

Public sector ITI is a joke, from the time when it used to front for foreign telecom equipment makers in the early 1990s, securing orders as an Indian supplier, buying practically all they supplied from foreign producers at the price they dictated, adding some Indian gloss here or turning a screw there.

Modern telecom equipment is basically software . Even the hardware is a lot of software preprogrammed into microchips. India is supposed to be good at software. And two, at least, of India’s information technology giants, Wipro and HCL, make both hardware and software. But they have not ventured into telecom equipment.

They have easy pickings elsewhere. Shyam and Himachal Futuristics are relatively small players. TechMahindra provides telecom solutions, but is a pure service company. Indian industry has chosen to abdicate this vital sector to foreign companies.

This has huge security implications. Cyber warfare is a new front of possible national aggression that can bring a nation to its knees, without the assailant so much as firing a toy gun. Entire systems crucial for the functioning of the economy run on computer networks. Supervisory control and data capture (Scada) is geeky jargon for most of us. Scada systems allow processes to be controlled from remote units.

Time for a new PSU: Indigenous telecom equipment

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