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BIF Recommendations on Make in India/Standards & IPR /R & D

BIF NOTE FOR NTP ON MANUFACTURING/MAKE IN INDIA /STANDARDS & IPR/R & D ( Pt. of Capsule IV )

Anchor Principle:

create a vibrant manufacturing ecosystem and increase focus on Standards, IPR and R&D

Key Recommendations

1. Enhance the Role of “ Make in India’ to boost the domestic manufacturing ecosystem.

a. Make india into a Global supply chain with a strong export strategyb. Encourage component manufacturing ecosystemc. Put India manufacturing on the world map by encouraging specific industry

that has reached a scale in capacity and capability. Example India can become fiber capital of the world

d. Incentivize design based manufacturing in India to increase value creation in manufacturing.

e. Remove infrastructure bottlenecks to attract large investment into setting up of global manufacturing hubs

2. Incentivise and strengthen IPR, R&D and Standards.a. Employ globally harmonized standards to exploit economies of scale and make

India competitive in the global market. b. Incentivize contribution to standards by strengthening standards from India. c. Strengthen the IPR regime without seeking any dilution of the SEP regimed. Incentivise local R&D. e. Remove all barriers for permitting setting up of Global R&D hubs out of India

EXPLANATORY NOTES

1.a) Enhance the Role of “Make in India’ to boost the domestic manufacturing ecosystem

There are two domains in the Telecom industry: infrastructure and services. The

infrastructure domain consists of the telecom equipment, the networks and the

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handsets. While the services sector commands nearly 60 percent of India's GDP, the

share of manufacturing has been stagnating at around 16 percent since the 1990s.

In view of the continuing & critical need to keep the cost of essential communication

services low, there are low or no import duties on telecom equipment While this is one

of the reasons of limited capacity in domestic manufacturing, BIF believes that the

importance of the ‘Make in India “program launched by the Hon’ble PM should be

considerably enhanced and strengthened to boost the domestic manufacturing

ecosystem.

1b) Global Supply chain with a strong export oriented Strategy: All initiatives to strengthen the domestic manufacturing base, made by Indian or global majors/OEMs to start or shift their manufacturing hubs to India should be welcomed. For that India needs to think in terms of beyond the domestic market and in favor of building expertise to capture the global market. The essential argument made is that at less than $65 billion, the domestic market remains small in relation to the world market, which is in excess of $2 trillion.

Going for the larger market as China has done would permit the exploitation of economies of scale and agglomeration and help the industry become globally competitive. It would be apt here to point out the Chinese analogy and try and replicate the Chinese model here. China in the late 90s, while encouraging domestic players to invest in manufacturing, chose to invite Global OEMs for setting up Manufacturing hubs out of China. Which resulted in increased foreign investments into manufacturing, creation of local jobs, skill development, economies of scale, besides lowering of costs of manufacture, thereby helping growth of the Chinese economy.

India has already invited global OEMs to invest in setting up global manufacturing hubs, which will further the transformation of manufacturing ecosystem in India.

Electronics industry can be decomposed into following spectrum addressing specific industry verticals:

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Generally speaking, consumer products are easier to localize. Given the high volume and low complexity of such consumer products, one can find more examples of consumer electronics being localized. The manufacturing footprint strategy for consumer products is hinged upon:

Lowest operating cost – labor, freight, facilities, electricity, etc. Proximity to customer base

On the other end of the spectrum are products procured by Enterprise & Service Providers. The manufacturing for Enterprise / Service Provider products can be characterized as high complexity and low volume. The manufacturing footprint strategy for Enterprise / Service Provider products is hinged upon:

Operating cost in balance with operating capabilities – industry maturity; technical talent; new product introduction capabilities; etc.

Proximity to key suppliers & key customers – esp. for smooth product launches and transitions

Due to high complexity in enterprise telecom manufacturing, it is imperative for companies to establish manufacturing at global locations that can cater to as large a market as possible to achieve economies of scale by maximising volumes. It is worth noting that India’s Domestic Demand for electronic goods was approximately $64 billion in 2014-15. In comparison, the world market in 2014 was $2 trillion. The Telecom network product demand is less than US$ 5 billion per year in India and contributes less than 5 % of the global demand.

a. Therefore, for enterprise based telecom equipment, keeping an export based, India for the World strategy at the front and centre of pragmatic policy making will provide the required stimulus for both domestic and foreign-owned manufacturers to exponentially increase production in the country.

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b. Make Exports Viable: There is about 5% cost differential in manufacturing in India for Exports. Government of India’s MEIS scheme for export incentives could be enhanced from 2% to 5%.

There is a cost disparity of exports of India vis-à-vis existing global nodes (e.g. Malaysia, China).

Landed cost element

India vs. China / Malaysia / Thailand (May 2016 study)

a)

Bill of Material (BoM)

India comparable Global pricing list Global pricing for components

b)

Inbound freight for shipping components into India factory

2.5% unfavorable (Sized as 2.5% of Bill of Material cost)Compared to global/regional benchmarks, India is farther away from component factories and the shipping rates are more expensive due to lower volume flowing into India specific transportation lanes vs. the ones going to “mega factories” in Malaysia, Thailand, Mexico, ….

c) Transformation cost / Conversion (raw material into finished goods)

India comparableIndia factory lack scale compared to China factories; Advantageous labor rates in India are offset by fully burdened cost of facilities & electricity

d)

Outbound freight for shipping out finished goods

2.5% unfavorable (Sized as 2.5% of Bill of Material cost)Due to low export volumes compared to global benchmarks, the logistics rates are slightly higher. Higher exports volume is needed to offset.

This cost disparity needs to be addressed for India to be an established manufacturing leader in the world.

1. Align Policies such as Telecom PMA to incentivise production scale-up (volume):

One of the main themes of Telecom PMA policy is focus on high local value-addition norms (50%+) calculated in terms of Bill of Material (BoM) percentages.

To quote from Niti Aayog’s Report on Electronics Manufacturing (May2016) – “A common belief among policy makers is that the higher the domestic value added in a product the better. This belief often leads countries to curb the exports of primary inputs (for example cotton and iron ore in the case of India) and protect the final good (for example, cotton clothes and steel). This is an erroneous approach. High value added is not virtue in itself if the product is not competitive in the world markets. It will simply not get produced on a large enough scale to make a dent in employment. On the other hand, a product may have only a small value added but if it is globally competitive,

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it can be produced on a mass scale with large number of jobs created. China is sometimes derided for adding just $7 to the iPhone, which then sells for several hundred dollars. But it is forgotten that China produces hundreds of millions of these phones, which add up to a significant number of good jobs for its workers. It is not important how much value per unit of a product a country adds. What matters is how much total value it adds.”

To enable Export-oriented electronics manufacturing, PMA policy needs to:

Revise value-add norms (currently based on BOM%) to the following stages (based on globally accepted norms of “substantial transformation”) which can be operationally verified as:

o Stage 1: Final Assembly & Test (FA&T); o Stage 2: Printed Circuit Board Assembly (PCBA); and o Stage 3: Local sourcing of components (based on cost, delivery, quality

parity)Companies should be allowed PMA compliance based on achieving these stages of substantial transformation.

Note: Authentic large-scale multinational electronics manufacturers will not be able to currently qualify high % bill of material content threshold due to lack of quality component eco-system in India. However, once Stage 1 and 2 are achieved for a good volume of products, it will create a large pull-effect towards promotion of Indian component eco-system.

Provide a framework for allowing hi-tech companies to sell under PMA based on the total portfolio volume being manufactured out of the India factory – both domestic & exports

o “Deemed Domestic Manufacturing” (DDM): Total $ throughput from India factory (including exports)

o As no global node can manufacture the entire product portfolio, the global hi-tech OEM can use the $ for $ “DDM” credits to qualify for PMA bids

Note: The larger volumes from the factory based on exports, generate jobs & create ecosystem; manufacturing the entire portfolio would never make economic sense based on India volumes alone.

Export-oriented vs Import Substitution Strategy

An export-oriented strategy is essential for the high-end telecom manufacturing sector to achieve the necessary volumes to be globally competitive, thereby creating larger number of jobs, building capabilities within the country and creating pull for local component suppliers to establish and grow.

There is a Unique value-addition of advanced global telecom manufacturing coming into the country. The co-location of R&D and high-tech manufacturing leads to a fly-wheel

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effect, resulting in faster product development and accelerated time-to-market. This builds the eco-system and achieves self-sustainable continuous growth.

1c. Also an export based India to the world strategy will increase emphasis on capacity and capability build-up and will create opportunities for a vibrant component ecosystem where Indian MSMEs will flourish.

Niti Aayog’s Manufacturing paper ( 2016 ) also points out that “.. import substitution is unlikely to lead to rapid enough expansion of our electronic industry. If we want rapid transformation, we must adopt an export-oriented strategy and work towards creating an ecosystem in which the industry can be globally competitive without import protection.”

1d) Place Indian Manufacturing on the World Map by encouraging specific industry that has reached scale in capacity & capability.eg. India to become the Fiber capital of the world.India can feature in the manufacturing map of the world by promoting quality manufacturing of Optical fiber. Manufacturing of fiber is a successful case study of Make in India. The optical fiber manufacturers have contributed significantly to design based manufacturing with co located R&D, 160 plus patents, significant capacity and exports to 100 plus countries. The manufacturers operate from global standards and contribute to the growth of standards. Also efforts are made to create skilling through home grown academies. Data intensive fiber is fundamental to all new technologies and wireless especially with the coming of 5G, IOT, M2M and increased need for low latency and high bandwidth of data, Also India needs to connect 100% of cell sites with Optical fiber from its present level of mere 20%; Hence given the huge local market and the global need for optical fiber , the industry must be given the right platform to scale up . Enabling policies supporting and incentivizing fiber manufacturing could bring economies of scale and huge efficiencies to kick in, thereby benefiting the nation as a whole.

Given the confidence of the industry and a vibrant expansive market, It is at this juncture that a special incentive package should be given to this industry to make India as the fibre manufacturing capital of the world.

1e) Incentivizing and protecting the significant investments in high end complex manufacturing and IPR creation, increasing the value addition in fibre manufacturing will carve out India’s ability to cater to domestic and the world market. At this critical juncture the significant investments manufacturing capacity and capability bear fruit in building concensus of India’s strength in manufacturing.

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1f) Need to remove infrastructure bottlenecks to attract investment into setting up of global manufacturing hub

India needs to draw from the Chinese model towards growth of the telecom manufacturing industry in India. First, rapid growth in telecom industry will be achieved by embracing domestic and international players. Big success requires operating in the large world market, which amounts to more than two trillion dollars as compared with only $65 billion in the case of the domestic market. Therefore, we must reorient our policy to ensure that the domestically manufactured products becomes competitive in export markets. This feature implies that trade policy and trade infrastructure must not handicap firms from becoming exporters.

Second, the Chinese experience also underlines the importance of large-scale manufacturing. Large firms are better able to exploit both economies of scale and of conglomeration. Since they must compete in the world markets to sell large volumes of output, they also have the incentive to continuously upgrade their processes, management and technology to stay competitive. Small and medium firms must either compete against these firms or become their ancillaries. Either way, they are forced to adopt cost-saving technologies to remain profitable. The implication of this feature is that the ecosystem must be friendly to the operation of large-scale firms.

Third, in today’s world, large firms are predominantly multinationals. Global giants in telecom industry have driven the rapid growth of telecom industry in China. The implication is that the policy regime should be friendly to all global OEMs. This is a more rapid and perhaps the only avenue to bringing large firms & investments to India.

Finally, the success of the Chinese industry also reveals the importance of geographical location of firms. From the beginning, China gave primacy to the creation of the Special Economic Zones (SEZs) and Economic and Technical Development Zones (ETDZs) along the vast coastline on its eastern and southern border. It also paid special attention to port development to remove any bias against exporting due to high costs of shipping. These are all important factors to make India a global manufacturing hub.

Besides, the country is required to initiate a slew of measures to boost Innovation & Productivity of Local Telecom Manufacturing.

In the short and medium term, India would need to:

remove the infrastructure roadblocks provide thrust to Make in India assured IPR regime respect for protection of patents (SEPs) removal of barriers for setting up Global R & D hub (Please refer Note attached) facilitation and simplification of processes for setting up Pilots/Trials for New

Technologies

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The long term approach should perhaps be:

to encourage and incentivise creation of Global R & D hubs in areas of New Technologies,

creation of world class Global Manufacturing hubs setting up of world class semiconductor fabrication units incentivize faster transition from development of new technologies/products to

go-to-market streamline the IPR creation and filing regime to make India a global leader in this

area.

WiFi and backhaul equipment :

Specifically, one needs to look at the changing demand in view of changed consumption patterns. An example could be in case of WiFi and backhaul equipment: There is huge need for this and almost everything is imported. This is not difficult to manufacture. One has to actively persuade the leading manufacturers of WiFi and associated equipment to set up shop to manufacture & export this. The demand estimate as per DOT ‘s latest tender announcement may be initially for 5 lakh hotspots to begin with. Similarly, OSS and BSS for Internet /OTT/WiFi usage is imported wholesale, along with equipment. This can be major focus for the software companies- to start, nurture and deliver solutions that can not only serve India but has great export potential .

Digital Transmission and distribution equipment: This is what uses the optic fiber as the medium but distributes the content as required , from originating point, through distribution to the final consumer points. GPON is a major example of this. Switches, routers etc of varying complexity are being imported in good numbers, and the demand will skyrocket with Bharatnet and other initiatives including 4G and 5G.

Satellite terminals & handhelds:

The biggest inflection point for the growth of mobiles came in when the Government decided to de-license the mobile handset. Satellite can become a potential viable option for providing affordable and accessible broadband to many unserved and under served areas in India. As a consequence, a huge potential market for satellite terminals ( VSATs/Satellite handhelds etc) exists, very similar to that of a DSL/Cable/FTTH/Wifi modem/equipment. With the right policies which will lead to creation of demand, local manufacturing of VSAT terminals & handhelds could be taken up in India to cater to this huge potential demand

Indian software companies can be leveraged effectively to drive need to get into product design, support NW based software, firmware, OS and App software. DOT

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jointly with NASSCOM and MEITY can come up with a master plan that encourages indigenous development. Several global companies currently invest substantially in Indian software companies for product design and software development. Considering the global move towards localization, these investments can no longer be taken for granted. Sustinence of these investments can be encouraged by linking R&D investments to local value addition in the PMA construct.

Facility to train people in the design, management and maintenance of new age equipment and systems, including CDN, Internet hardware and systems. We need a lot of people at all levels- design, manufacturing& testing, network design and implementation and day-to-day management of systems.

There is a huge scope for job creation/employment, considering this aspect and local manufacture. We need a skilling plan to enable this. This will also catapult India into the community of advanced nations

Local Manufacturing in Handsets

Given the fast growing mobile handsets and telecom gear market due to the data

explosion, it is imperative for India to become a global hub for telecom equipment

manufacturing and hence the need to identify the measures needed for boosting

innovation and productivity of the local telecom sector, examining the existing patent

laws to promote domestic manufacturing, suggesting a framework of improving

domestic manufacturing after examining the issues of standards, certification and

testing.

Another area which is essential for incentivizing local manufacturing is the strengthening of the Intellectual Property Rights (IPR) regime. In India, while the era of 2G& 3G are almost over and with receding requirements for 4G, however in the case of 5G, a lot needs to be done. Besides investments in R & D for 5G, what is also required is reliability and predictability when it comes to the IPR Regime. This will enable us to keep pace with the advent of new technologies viz. 5G, AI, M2M, Cloud etc. With the declaration of intent by India to become an early adopter of 5G technology and with the data explosion already happening, it is absolutely essential to build investor confidence by strengthening our IPR regime to make it more reliable and predictable.

While Local Value Addition in handsets/Smartphones is of the order of merely 6%( average), (Refer IIMB-Counter Point Research on Value addition for handsets –note attached ) the same in the area of Telecom Infra is of the order of a few percentage points higher . In a study/Report jointly conducted by BIF along with E&Y, 2016, it was established as to how to increase local VA for handsets manufactured in India under the GST Regime. (Copy of Note attached)

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Also it is imperative that equipment manufactured in India in the DTA area be categorized as “deemed export “ and be provided adequate recognition accordingly. (Separate Note attached)

However, keeping in view that since some of the equipments are already covered under ITA-1 & under MLAT Agreements viz. with ASEAN-FTA nations, this would not be sustainable and will not lead to commitment of large investment due to the fear of reversal. Also such a move is likely to be counter-productive as local value add is unlikely to increase unless there is a corresponding import duty increase on high value critical components. However, since they would be covered under ITA-1, this may not be possible.

India is also signatory to bilateral and multi-lateral agreements with ASEAN-FTA nations and any move to increase import duty for equipment from these nations is likely to invite irreversible strictures and penalties and hence shall not be possible.

India has already taken a step forward in this direction by not becoming a signatory to ITA-2

The approach should be incentivized towards meeting not only domestic demand but also to become a regional if not a global export hub. This would enable attaining the twin objectives of becoming globally competitive in both price and quality. Steps should be taken to provide suitable incentives and also provide amiable ecosystem which will attract foreign investors to set up global manufacturing hubs out of India.

This would result in technology transfer, creation of local design hubs, local ecosystem of manufacturing of components, job creation, skill developments, etc and will give a huge boost to the overall economy.

Anchor Principle 2:

Incentivise & strengthen IPR, R & D & Standards

Key Recommendations:

2a). Endeavour to continuously employ globally harmonized standards to exploit economies of scale and drive down hardware prices and cost of services

Given the importance of quality networks operating from standards is an imperative and all products must be in encouraged to be in conformance to globally accepted standards of manufacturing, testing and usage and are used in over 150 countries all across the world after meeting all the relevant legal & regulatory requirements.

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These products are in conformity to globally harmonized standards on spectrum, design, manufacture, quality besides environment, safety, security & conformity assessments. The Licensed Service Providers who use these equipments in their networks benefit from these globally standardized and harmonized products by being able to procure hardware at greatly reduced costs by being able to exploit economies of scale associated with production of such standardized products, reducing their cost of providing services along with improvement in efficiency of delivering these services. Hence the imperative to adopt and use globally harmonized and standardized products in tune with the best global standards cannot be over emphasized.

Since the need to conform to global standards is clearly established, India’s manufacturing will greatly achieve if it gets actively involved in global efforts for creation of new standards, certification and testing procedures and for implementation of the same for future products. In this context, the role of TSDSI is worthy of mention in the context of setting up of standards and the participation in global standards setting by virtue of membership in leading global standards bodies viz. 3GPP. OneM2M, etc. The ongoing support from Department of Telecom and Telecommunication Engineering Centre (DoT/TEC) in making TSDSI a well-established and recognized Standards Development Organization from India and to continue its momentum and work through tabling local requirements at global platforms and for promotion of locally developed standards and for contribution to its global harmonization is welcome.

Current TSDSI led SEP Policy is in harmony and in sync with that of the European Standard bodies viz. ETSI, 3GPP, Japan's ARIB and other leading Standard Setting Organisations ( SSOs ) and Standard Development Organisations ( SDOs)

Since the next Telecom Revolution is around the corner with the advent of 5G and associated technologies that would allow Internet of Everything viz. M2M & IoT, and that it is acknowledged globally that India can play a major role in their development through contribution by way of IPRs/SEPs, it is extremely important for India to march ahead with progress of new advanced technologies.

2b) Regarding Standardisation, Certification and Testing of Telecom Equipment

Again quoting from the Niti Aayog’s Manufacturing paper (May2016) - “Before we rush to forcing our standards in the domestic market, we need to create a business-friendly ecosystem and grow larger. Premature adoption of standards can scuttle the growth of the industry prematurely. One way to see this is to ask whether the adoption and enforcement of a local standard in mobile telephony in the early 2000s would have permitted the phenomenal expansion of mobile phones that we saw in the last decade.”

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It is critical that for an India for the World strategy to succeed, Indian standards, certification and testing mechanism are harmonised with global standards and best practices. Otherwise, standard-setting in siloes will hamper the growth of Indian Telecom Manufacturing.

Furthermore, it is important that government incentivises setting up a good testing lab infrastructure in the country which are capable of certifying to international standards and practices. STQC-International Common Criteria Certification Scheme is one such example where India can grant international Common Criteria certificates on security aspects.

Sometimes, security is cited as the primary reason for need of local testing and certification. It is worth noting that global MNCs are responsible for end-to-end supply chain security independent of the location of manufacturing of product/ components. Conflation of security and dometic manufacturing is counter productive and may lead to erosion of both the objectives.

2c) Continue to respect and strengthen the existing IPR regime without seeking any dilution of the SEP regime

It is felt that the existing patent laws including the IPR framework in India needs to be certainly strengthened. It is in the interest of all stakeholders viz. IPR holders who make immense investments in R & D.

Some of the measures that could be suggested in this regard are:

-The Reliability and Predictability of the IPR Regime should be improved. -IPR creation may be encouraged & incentivized -There should be an assured IPR Regime with protection of patents /SEPs. -This includes compliance and respect for international framework to deal with Standard Essential Patents (SEPs) based on FRAND principles

Successful standardization attracts many users. Very often number of users grows quickly to become much more significant than number of contributors to the standard itself. Sometimes number of such users are known to have grown to become much stronger than any of the innovators that contributed to the standardization process.

Standardisation can only thrive if sufficient incentives are created for innovators to contribute their best technologies to a standard as without contributions, there are no standards. Standardisation involving patents is a voluntary act from companies willing to

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share their intentions with others to build a standard. Therefore FRAND (Fair, Reasonable & Non-discriminatory) principles serve a dual purpose viz.

a) Possibility of a standard developer to recover ROI within a reasonable time frame (commercial window of opportunity)

b) Possibility of a standard developer to get access to leading edge technologies for compensation that is reasonable so that its burden will not prevent the standard from being implemented

India has been a beneficiary of patented standardized technologies which are made available on FRAND basis to handset manufacturers. Such technologies are useful for Broadband communication devices, thereby giving new fillip to India to quickly emerge as a rising star as a manufacturing hub for broadband devices. This has spurred competition with entry & exponential growth of many businesses of Indian origin besides triggering of consumer demand.

Keeping the above in mind, it is suggested that Govt. of India should not act as a Regulator in defining FRAND terms & fixing pricing as Govt. intervention in the system will be counter-productive to market driven inter-company licensing regime and deter Ease of doing Business. In other words, SEPs should not be regulated

India has the 2nd largest position in the World Mobile Telephony market and the 2nd

largest across Asian economies in terms of Mobile Infrastructure. Indians have shown immense inclination towards standardized devices as it offers them inter-operability between devices, higher speed, regular technology upgrades, higher efficiencies & performance, increase in overall competitiveness of these devices combined with continued decrease in prices of handsets & data rates

Govt’s announcement in the recent past on ‘Special Patent Regime ‘with less tax burden on royalty earning or intent of ‘rolling out red carpet & removing red tapism’ calls for different market framework that nurtures innovation, rewards & remunerates innovators, encourages competition & discourages free riding & punishes infringers. Such a move is warmly welcomed as it safeguards India’s interest by not diluting the existing IPR regime but leads to its strengthening

One of the other important aspects of IPR framework is the handling of the mechanism for protection of IPRs for Standard Essential Patents (SEPs). Dilution of SEP regime will kill the process of collaborative standardization process which ensures transparent process with contribution from all companies (big & small). The Process of Standardisation ensures larger participation from all stakeholders & promotes competition among manufacturers. It also encourages smaller players to invest in R & D so that it can contribute into the SEP generation process & create leverage in the process. In case Rules are amended to dilute SEPs, then the entire collaborative process of standardization will collapse and power will shift only to the big companies which in turn will tend to hide their actual technology cost (cost of innovation) into their product cost thereby driving prices up and leading to diminishing of competition in the

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market as smaller players are likely to exit the market. This shall not be in the interest of the consumers, as it will raise the price of the product and reduce the urge to innovate further.

Charging Royalty on ‘ Smallest Saleable component ‘ is an impractical way of monetizing SEPs. This because of the fact that all innovations do not lie on one single chip but value is created only when multiple chips and components interact with each other in an integrated manner. Claim of innovators will not exhaust even if royalties were charged at that level and is likely to continue even at the finished product level making licensing system very complex to implement.

As doing so will raise the price of handsets/devices, since the cost of IPR if charged on chips will get amortised over all devices (low and high), thereby raising the price of those at the low end, leading to bizarre situation of the poor subsiding the rich. Hence, should be avoided.

2d).Incentivise Local R & D and 2e). Remove all barriers for permitting setting up of Global R&D hubs out of India

Incentivisation of local R & D would perhaps be possible through two ways viz.

c) Remove all barriers for setting up global R & D hubs &d) Incentivising the process of setting up local R & D hubs by facilitating

research, innovation, IPR creation, providing for a R & D fund, etc

A Telecom R&D Fund should be enhanced for research, IPR creation and development activities. The fund should help provide soft-loans, grants, reimbursement of R&D expenses, IPR filing and renewal fee and for financing R&D projects.

The focus areas for the R&D fund may include core research & innovation in the following areas viz. : (a) Next Generation Networks consisting of technologies for core and access, core and edge routers, Soft switches, Ethernet Switches, xDSL etc. (b) Next Generation Mobile Networks: LTE Advanced, IP Multimedia systems, cognitive radio, software defined radio, SDN & NFV, distributed antenna systems, backhaul technologies (c) Fiber optic technologies (d) Terminal Devices – modems, routers, dongles, data cards, mobile handsets, wireless access points, mobile handsets etc. (e) Security and surveillance equipment, sensors (f) Non-conventional energy for telecom (g) Any other area considered commercially relevant in future

A Telecom Research and Development Park could be established with the purpose of facilitating research, innovation, IPR creation and commercialization for fast and

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sustainable growth of the telecom industry. This could be done through the PPP mode with co-partnership and co-creation both by the Govt and the private sector. This Telecom R & D Park could be entrusted with the task of promoting development of new technologies, generate IPR‟s, incubate innovations and promote entrepreneurship to position India as a global leader in telecom innovation and Make India a hub of telecom equipment manufacturing.

For India to attain leadership in the area of manufacturing at a global level, it must have a strong R & D base. To attain leadership in R & D in new technologies, India needs to become a Global R & D hub.

As the telecom industry is a fast paced and fast changing industry , we need to ensure that we provide all support to step up the R & D capability to keep pace with the rapid change of technology procedures & processes for import of Capital equipment to set up R & D labs out of India need to be simplified and facilitated as lack of which is likely to be detrimental to the growth of telecom infrastructure and deny India the opportunity to possibly become the global R & D hub and in particular may lead to loss of a big opportunity in wake of development work on 5G.

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