BSNL, MTNL must invest in R&D: Security agency

The National Security Council Secretariat wants to make it mandatory for Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd to invest in R&D to reduce dependence on imports and also develop a vibrant telecom products ecosystem in the country. 

The NSCS is India's apex security agency that looks into the country's political, economic, energy and strategic security concerns. 

"Telecom research efforts in India are sub-optimal and it could be considered whether expenditure on R&D could be made mandatory and eligible for tax benefits, which would be particularly relevant for public sector entities like BSNL and MTNL," says the NSCS in a confidential note seen by ET. 

A senior BSNL executive said "there is currently no compulsion on either BSNL and MTNL to spend money on product development research". 

At present, bulk of the telecom R&D activities by government entities in undertaken by Centre for Development of Telematics Ltd (C-DoT) and ITI Ltd, while the telecom department's technical wing, the Telecom Engineering Centre (TEC) plays a coordinating role. 

"While C-DoT and ITI have made forays into telecom product development, these needs to be enhanced much more for evolving an ecosystem that fosters development of patents, generation of intellectual property rights and also influences international communications standards," says the NSCS report. 

It further adds that "incentives must be considered" for generating and registering IPRs relating to telecom products. The apex security agency has also urged the telecom department to strengthen internal systems to undertake "assurance testing and certification" before any component is integrated into Indian telecom networks. 

It, however, believes "blocking of procurements from foreign companies may not be a practical proposition", given the heavy dependence of the domestic telecom industry on foreign gear, and accordingly, wants the telecom department to examine whether the current model of testing and certifying telecom products in the UK can be implemented in India. 

The report does not provide details of the UK testing model. The NSCS has also urged the telecom department to consider the feasibility of Special Economic Zones (SEZs) for highend telecom products manufacturing. 

"SEZs can assure a domestic market as well as promote exports to reap the benefits of economies of scale to make India a source of highend telecom equipment," says the central agency. 

The apex security body's observations also come at a time when India is setting up multiple regulatory agencies for coordinating telecom security related initiatives to shield India's telephone networks from potential cyberattacks.