India's BSNL runs into controversy with $120M optical network contract

Indian state-owned company Bharat Sanchar Nigam Limited (BSNL) has been in the news because of a 10 billion Indian rupee (US$120 million) purchase order (PO) for the supply and deployment of optical transport network across the country. Media reports say that the service provider is likely to award it to Nokia, front-ended by domestic vendor HFCL as its system integrator for the project. 

This is problematic because India is focusing on the policy of Atmanirbhar Bharat (self-reliant India) to bring down its import bill. A government mandate stipulates BSNL must procure gear from domestic telecom equipment companies, which is why the company is using indigenous gear for its 4G network. It has placed an order worth INR190 billion ($2.28 billion) with a consortium led by Tata Consultancy Services (TCS) and with ITI for deploying 100,000 4G tower sites across the country.

Apart from HFCL-Nokia, other applicants for BSNL's optical network contract include United Telecoms (UTL), along with the Center for Development of Telematics (C-DOT) and Priyaraja Electronics and Tejas Networks, part of the Tata Group. Besides the supply and installation of the optical transport network, the contract also includes three years' operation and maintenance services, as well as an annual maintenance contract for eight years. The service provider is likely to issue an advance purchase order (APO) soon.

Domestic vendors want more help

Voice of Indian Communication Technology Enterprises (VOICE), a society working to foster the development of digital communications technology, has written to the Communications Minister, Ashwani Vaishnaw, expressing its displeasure with this development. The society alleges that BSNL cancelled the bids of Indian vendors on flimsy grounds to give an advantage to the HFCL-Nokia combine. 

"The main issue is that Tejas was the only bidder in the first round and it had qualified, so ideally, it should have got the BSNL contract. However, the government decided to reissue the tender and then UTL-CDOT-Priyaraja and HFCL-Nokia also applied for the contract. Tejas' rate in the first tender was also revealed, which helped the other participants in the second round," Rakesh Bhatnagar, director general at VOICE, told Light Reading. 

The consortium led by UTL was disqualified on the grounds that Priyaraja didn't have trusted source certification. 

Indian telecom vendors have been asking the government to offer incentives to Indian service providers to push them to procure gear and services from Indian vendors. Over the last few years, the government has come up with several initiatives, including the Production Linked Incentive (PLI) scheme, to promote domestic manufacturing.

"There is definitely a need for the government to give incentives or push service providers to use indigenous gear. As new players, we don't have the economies of scale to compete with the established players and it is here that we need support from the government. There is also a tendency for government tenders to come with such exact product specifications that only a specific company would qualify. This needs to be discouraged," said a senior executive of an upcoming Indian telecom gear maker on condition of anonymity.