TEMA: Fruits of Labor

Unlike Nasscom, the infotech industry’s high profile and aggressive

representative apex association, the Telecommunications Equipment Manufacturers

Association of India or TEMA for short, is a quiet organization. In existence

for more than a decade now, TEMA has rarely made any loud proclamation of its

achievements as the Indian telecom industry’s oldest association. As such,

despite the fact that it has brought a lot of cheer to the telecom manufacturers

in the past couple of years, very little is known of the association outside the

telecom equipment manufacturing community. Apart from its quiet ways, TEMA has

also the distinction of being the only association in the telecom industry that

is not fighting a case against the government. The other two influential telecom

industry bodies, COAI and ABTO, have not just been battling each other but also

the government over issues like the legality of CDMA-based limited mobility

services.

A Broad-based Organization



Affiliated to leading international telecom industry and trade associations,

including ITU, PTC, TIA (USA); GAIA (Spain); ATIA (Australia); CIAJ (Japan),

TEEMA (Taiwan); CCP (Korea); ITAH (Hong Kong), TEMA plays an active role in

dissemination and exchange of information with the government, foreign

organizations, embassies, trade missions and Indian missions abroad. It has a

membership of over 100 companies covering almost 80 percent of Indian telecom

equipment manufacturers. The association is also part of a number of working

groups/committees set up by Government of India like the Telecom Development

Council of the Ministry of Communication and the Working Group of Telecom

Sector/IT Hardware Sector for the Tenth Five Year Plan set up by the Planning

Commission.

Established in 1990, most of TEMA’s efforts in all these years have not

just been directed at convincing the government to do away with red tapes

affecting the manufacturers, it has also played a crucial role in defining the

broad parameters of the government’s telecom policy from time to time.

Officially recognized by the government of India as the apex body representing

telecom equipment manufacturers, both in the public and private sector, TEMA

plays a crucial role in advising the government and influencing decisions

relating to Indian telecom industry.

TEMA’s Recipe for Success in Manufacturing International trends are… Rapid technological changes leading to rapid obsolescence Speed to market has become critical, companies focus on product development and rapid rollouts Major trends towards contract manufacturing Indian manufacturers must … Follow the contract manufacturing model where few large contract manufacturers will cater to requirements of circuit pack manufacturing for telecom equipment manufacturers Do integration and testing at their facilities, thus resulting in volume manufacturing To provide competitive cost benefits, the government ought to… Maximize localization Make continuous efforts to reduce cost of material and freight

Voice of Industry



No doubt, it has succeeded in grabbing a number of concessions from the

government not only for the benefit of Indian telecom equipment manufacturers

but also for the new private operators, especially in the past two years. For

example, earlier sales tax concession on purchase of telecom equipment was only

the privilege of BSNL (erstwhile Department of Telecom Services) and MTNL as the

Department of Telecom (DOT) alone could issue the C Form for availing sales tax

concessions. It was because of TEMA’s effort that the privilege was extended

to the private operators which in turn now saves them anywhere between Rs 1,000—1,500

crore annually.

Perhaps the biggest battle that TEMA has won for the telecom equipment

manufacturers is its success with almost removing the duty anomaly that exists

between the import of finished products and components. The association had been

fighting for this for the past five years. And its efforts bore fruits this year

when the government in its latest export-import (Exim) policy allowed Electronic

Hardware Technology Park (EHTP) units to sell some amount of their products in

the domestic market as an incentive. It is to be noted here that EHTP units are

allowed to import components duty-free unlike others who have to pay a duty,

which in many cases is higher than the duty on finished products. "We

believe that any export strategy would only be successful if we have good access

to the domestic market. The WTO commitment is with respect to finished goods and

does not cover components, and this has led to the anomaly between duty on

finished goods (which was lower or getting lower) and components (which was

higher). We got this anomaly corrected to a certain extent by getting changes

made in the EHTP scheme," NK Goyal, president, TEMA, says. Goyal, who is

also popular for his skills and knowledge as a Yoga and Reiki teacher, has been

successfully spearheading TEMA’s efforts on many fronts. In fact, he along

with P Balaji, the IIT-IIM Ahmedabad educated secretary-general of TEMA, has

been the key force behind the growing strength of the organization.

Influencing Policy Makers



TEMA has also succeeded in convincing the government to push the date of WTO-induced
tariff-free regime from 2003 to 2005. "We worked hard to convince the

government on this front because we felt that local manufacturers needed some

more time to put their acts together," says Balaji.

One of the biggest achievements of TEMA has been the liberalization of the

customs inspection regime. TEMA has long been demanding that to enable

high-velocity manufacturing, the government should make policy changes in

customs to introduce procedural controls in place of physical controls to reduce

customs clearance duration to one day. It should enforce audit to ensure

compliance and target a 15-day turnaround from ship-in of components to ship-out

of products. "We wanted the government to trust the manufacturers and allow

the customs regime to work on faith very much like the excise system where the

self-assessment scheme was introduced some years ago and has been working fine.

Thanks to our effort, a self-assessment scheme for customs was introduced in

this year’s budget," says Goyal. Goyal and Balaji point out that the new

liberalized customs inspection regime would go a long way in reducing the cycle

time leading to efficient use of working capital, faster delivery of products

and ultimately better competitiveness of Indian manufacturers.

More recently, TEMA was successful in resolving the dead locked issues

between telecom equipment manufacturers and the state-owned operators BSNL and

MTNL on material procurement issue. As per the new norms, arrived at after

two-month long deliberations among TEMA, DoT and BSNL-MTNL, the tender

processing time has been reduced from 180 days to 120 days. Accordingly, the bid

validity period has been reduced from 210 to 150 days. Among other things,

guidelines have been issued to SSAs to make the initial payment to various

vendors within three weeks of receipt of invoices/bills for the supply of

material.

TEMA has also been busy persuading the government to implement the provisions

with regard to manufacturing contained in the New Telecom Policy 99. The

association wants the government to implement provisions with regard to

incentives to private operators for buying indigenous telecom equipment. It also

wants the government to encourage R&D efforts in the telecom

equipment-manufacturing sector so that Indian companies become globally

competitive and keep pace with the latest developments in the world.

Ravi Shekhar Pandey