The US telecom industry has urged the Indian government to reevaluate its policies with regard to capitalisation requirements and application fees for telecom licences as they reduce the amount of resources available to service providers for building their networks.

"TIA urges India to re-evaluate the basis for license application fees, capitalisation requirements and bank guarantees as it applies to telecommunications service provider licences," the telecommunications industry association (TIA) said in a memorandum submitted to the US trade representative (USTR).

TIA, which is the top-most industry body of America's telecommunications sector and is deeply interested in the vast potential being offered by India in this field, said as a general matter, application fees should reflect the cost of processing an application.

"While bank guarantees are appropriate in limited cases, such requirements should reflect the scope of business intended to be offered and should be a temporary, not permanent requirement," it said.

"India should seek to reduce high licencing fees and capitalisation requirements as they reduce the amount of resources available to service providers to invest in building out their networks and connecting India's vast population," the TIA said.

In its letter, dated October 3, TIA also urged the US government to continue to engage with India on the government's proposed policy related to in-country security assurance testing and facility inspection and black-listing of foreign telecom products on account of security concerns.

TIA said it is very concerned over the discriminatory policy proposals that India is contemplating, which are aimed at increasing manufacturing and innovation in the ICT sector and that this signals a reversal of the generally open-market and pro-competitive policies India has taken in this sector.

"In addition to the negative consequences for meeting India's ICT connectivity goals and hampering its ability to benefit from global collaboration, these policies run counter to India's longstanding international trade commitments under the WTO, its national treatment obligations under the GATT, and its G20 pledge in 2008 not to increase barriers to trade," TIA said.

Non-discriminatory, technology-neutral and incentive-based policies are preferable to discriminatory policies that favour one producer over another, it said.

It also expressed its opposition to the planning commission's draft proposal for 30 per cent of all electronic procurements by the government be reserved for domestically manufactured products.

"If implemented, this policy will undermine the country's ability to innovate, will impose discriminatory and unrealistic requirements on companies seeking to sell to the Indian government, will increase the Indian government's own costs by restricting procurement options and will violate critical commitments that the government of India has made to resist trade and investment protectionism," the TIA said.

TIA noted that despite the global economic slowdown, India continues to be one of the world's fastest growing ICT markets.

Since 2006, India's total wireline and wireless telephone subscribers have increased from approximately 164 million to over 846 million, representing almost 416 per cent growth in five years.

The number of people with broadband internet connections (> 256 kbps) has grown by over 500 per cent since August, 2006, to over 11 million subscribers, yet the number of connections remains low relative to the population.