A Working Group constituted by the Department of Telecom to prepare a roadmap for the telecom sector in the 12th Five-Year Plan has proposed giving 100 per cent preference to domestically manufactured telecom products in government-funded projects.

"100 per cent preference for India products in government procurement and projects funded by government and USOF (Universal Service Obligation fund) should be given," the Working Group said in a presentation to the DoT. The Working Group's recommendation is in line with the recommendation made by telecom regulator TRAI.

Telecom Regulatory Authority of India (TRAI) had in April recommended preferential sourcing of locally produced telecom equipment and other components. It said that use of indigenous products in Indian telecom networks should be increased from just 3 per cent in 2009-10 to 80 per cent by 2020.

The telecom regulator had proposed to incentivise the operators to source Indian products, as well as penalise them in case of non-compliance with the proposed sourcing norms.

"If a service provider is not able to meet the criteria of market access, then it will deposit an amount equal to 5 per cent of the shortfall in the value of the equipment in the Telecom Research Fund or the Telecom Equipment Manufacturing Fund," TRAI said.

However, while the DoT group favoured giving incentives to telecom operators for sourcing indigenously made products, it was against imposing a penalty on the operators for purchasing foreign equipment. "Penalties is not a preferred option, but operators should support Indian products," the group said.

The group said that operators should commit to purchase Indian products when they are comparable in price and performance to imported products. "Service providers should commit to participate in trials of newly created Indian products, nurture them and place pilot orders," it added. The group also recommended that telecom operators should fund research and development for creation of new intellectual property right (IPR) technologies.