Telecom manufacturing in India not apace with sectors growth: Report

New Delhi, Dec 12 (UNI) Apart from facing an acute shortage of components, the country is also hit by lack of high end technologies required for manufacturing telecom equipments like handsets, transmission and switches, according to a Pricewaterhouse Coopers (PwC) report.

Lack of infrastructure in the country related to road, electricity and ports adversely affect the manufacturing operations in terms of transportation of components and finished equipments in the sector, said the report.

The report was released by Prime Minister Manmohan Singh at the 'Telecom India 2007' here today.

The report says that the telecom manufacturing sector is estimated to be 4.5 billion dollars and has grown at an average grwoth rate of less the 8 per cent in the last 10 years inspite of spectacular growth in the Telecom services market.

Consequnetly the share of import is fulfilling Indian telecom equipment demand which has gone up from 47 per cent in FY 2004 to 59 per cent FY 2006.

''The reason for increasing dependence on imports is the increasing demand from segments such as wireless, transimission and broadband, where India currently has negligible manufacturing capacity,'' said the report.

Adding to the misery is the procedural constraints involved in the import of components related to clerance of goods at airports and ports mainly attributed to complex procedural formalities and tiring documentation required.

Moreover, due to insufficient availability of finance and wide presence of price competitive components from China and other South Asian markets, Indian manufacturers are not interested in setting component supply units, the report added.

One of the prime reasons why manufacturers are not able to compete with their rivals who have achieved global scale and cost competitiveness include higher manufacturing costs and lower labour productivity.

According to the report, there are numerous labour laws in India which have not been effectively updated with the change in market scenario as well as the complex web of legislative procedures involved which leads to a very slow system of dispute resolution are some of the major hurdle being faced by the Telecom sector.

The sustenance of unprecedented growth rate in telecom and reduction in the urban- rural divide necessitates need for extensive research and talent development to over come the barriers that have led to the growth being confined to urban areas.

The PwC report points out that the gap between urban and rural teledensity has been widening with urban teledensity currently at more than 55 and rural teledensity at less then eight access lines per 100 rural population.

In urban areas, metros are estimated to have mobile teledensity of 70 compared to rest of urban India at less than 40 per cent mobile teledensity.

About 70 per cent of Indian population living in rural areas is served by only 24 per cent of the total access lines in the country.

UNI