Homegrown telecom companies have cautioned the Centre against the exploitation of the Free Trade Agreement (FTA) route, following a move to restrict Chinese companies in taking part in government-backed orders

NEW DELHI: Homegrown telecom companies have cautioned the Centre against the exploitation of the Free Trade Agreement (FTA) route, following a move to restrict Chinese companies in taking part in government-backed orders.

"We will need to have a close watch on the Free Trade Agreement and ensure that the route is not exploited. Gradually some loopholes will be discovered but we are sure that the government will plug the same urgently," former director-general, Telecom Equipment Promotion Council (TEPC) as per RK Bhatnagar.

India has trade ties with countries such as Singapore, Malaysia, South Korea, Thailand, Japan, and Sri Lanka, which, the domestic companies fear could be used to supply Chinese gear in disguise.

Bhatnagar further said that the country of origin check should be made more stringent.

The new move discourages government orders to companies whose origin is from countries sharing borders with India, and such can only be considered if they are registered with an authority to be set up by the Department of Promotion of Industry and Internal Trade.

"To safeguard against transit supplies, strict enforcement of the rule of origin will have to be done by the government at all ports in the country. Custom authorities will be required to be extra vigilant," he added.

The norms also seek to block the supply of telecom equipment that has come on the close heels of a ban on 59 Chinese apps in the backdrop of a military standoff between Indian and Chinese troops in Ladakh.

Domestic companies have already been seeking necessary restrictions on China-origin companies saying that such enterprises with cost-efficiencies easily win contracts from public-sector firms.

In May, finance minister Nirmala Sitharaman exempted global tenders below Rs 200 crore in government supplies to encourage local companies to further push the cause of Make in India, as a part of Atmanirbhar Bharat (self-reliant India).

"We support the government's move to restrict Chinese companies from selling their products and equipment via public sector companies contracts," Sandeep Aggarwal, vice-chairman, Telecom Equipment Manufacturers Association (Tema) said.

The government's fresh move would further deter Chinese companies such as Huawei Technologies and ZTE to supply equipment and products to state-run firms and agencies even if they have crossed the initial bidding stage.

"In fact, telecom being a sensitive area, China-based companies, their subsidiaries or Chinese majority-owned ventures should also be restricted from supplying to private sector telecom service providers," Aggarwal added.

The revamped General Financial Rules 2017 allows the Centre to intervene in matters that are directly or indirectly related to India's national security. Both Delhi-based Tema and TEPC represent domestic telecom gear makers and companies such as Vihaan Networks, Sterlite Technologies, Tejas Networks, Coral Telecom, and Paramount Wires & Cables.