Deregulation, Entry of MNCs, Public Technology Procurement and Innovation Capability in India's Telecommunications Equipment Industry

Sunil Mani

No 2003-01, UNU-INTECH Discussion Paper Series from United Nations University - INTECH

Abstract: India has a sizeable telecom equipment manufacturing industry. The industry, which was originally dominated by just one state-owned corporation, has now been deregulated. Currently the industry consist of twelve SMEs, which manufacture small and medium switches and seven large firms (of which five are TNCs) manufacturing large switches). The country has a history of extreme dependence on foreign technology imports through essentially the licensing route to manufacture large switching equipment. These imported technologies were shown to be inappropriate to the usage pattern prevailing in the country. Consequent to this, considerable investments were effected through in-house R&D to adapt this inappropriate technology to local usage conditions. However some systematic efforts towards building up of local innovation capability through 'green field R&D projects' were initiated only around the mid-1980s. The paper defines innovation capability in telecoms equipment in terms of the ability to conceptualise, design, and manufacture state-of-the-art tecommunications equipment coupled with the ability to keep pace with important technological changes. This definition of innovation capability is operationalised in terms of an index of R&D. By taking three cases of telecoms technologies namely (a) main automatic local exchanges; (b) a Wireless in Local Loop access technology; and (c) telecom software exports, it is demonstrated that the country has a growing innovation capability in this sector. A survey of the various contributory factors identifies public procurement as the main instrument that has stimulated this activity. But with the opening of the telecoms carrier industry to private sector providers, this may become less of an effective instrument in the years to come

Keywords: Innovation Policy; Technology Transfer; Telecommunications Industry; R&D; India (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (7)

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