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Local electronics units pin big hopes on National Optic Fibre Network, project to bring broadband to 2.5 lakh villages-Neenu Abraham
-The Economic Times

BANGALORE: It is one of the most expensive and ambitious projects in India's technology history connecting 2,50,000 gram panchayats in the country with a fibre optic network. It would need Rs 21,000 crore and as it is being planned now, the project needs exceptional project management, cutting-edge technology, and close coordination between several government agencies.

While the government is preparing to start the project in the next two months, a set of big players with substantial investment plans are watching the progress closely. The reason: The National Optic Fibre Network (NOFN) is being considered as a test case for the government's ability to deliver.

Tenders have been called for the NOFN and the final bidders will be known over the next two months. At the moment, the network is being planned as a largely domestic exercise. Homegrown telecom research agency Centre for the Development of Telematics (C-DoT) has been developing all the relevant technologies needed for NOFN, and it has inked technology transfer pacts with six Indian vendors -- ITI, Tejas Networks, VMC, Sai Systems, United Telecoms and SM Creative -- who will manufacture the gear if they win the contracts.

The NOFN project is being overseen by a new entity called Bharat Broadband Network (BBNL) and is being executed by BSNL and MTNL. With 2.5 lakh villages to be covered, the eco-system that this project will spawn is going to be massive. "Besides those involved in laying optical fibres, players ranging from those involved in testing, civil work, logistics, local vendors, antenna-suppliers and technicians are going to benefit from the project," said a government official who is closely involved in this project.

Of the Rs 21,000 crore earmarked for this two-year project, almost 70% would be spent on domestic players. Among those who will be sharing the rest will be the global chip-makers and the electronics industry as India lacks a fab to source chips from.

The NOFN project involves bringing optical fibre connectivity to villages and extending broadband to the required locations using wireless technologies. A technology called GPON (Gigabit Passive Optical Network Technology) and broadband wireless terminals are needed for this. Once the fibre connectivity is brought to villages, the broadband connection is distributed to several points through a service provider. C-DoT has been using Freescale Semiconductor devices for delivering broadband content to rural areas, Sai Jayram, who is heading the broadband and 4G projects at C-DoT, had told ET during India Telecom Show 2012.

One positive fallout, if this project succeeds, will be the impetus it will give the semiconductor and electronics industries.

Broadcom, the world's largest provider of chipsets which enable GPON, is among the many players bidding for a share of this project. "We have invested a good amount of time and energy studying this for the Indian market," says Rajiv Kapur , managing director of Broadcom International PTE.

The success of this first made-in-India project will decide whether India has the capability to deliver high quality services in electronics. "The NOFN project will be the lead vehicle which will show the world that India has the capability to indigenously handle mega projects," says Rajiv Kapur.

The stakes are huge since leading global telecom equipment vendors have been barred by the Indian government from supplying GPON gear for this mega venture. Ericsson, Nokia Siemens Networks, Alcatel-Lucent, Huawei and ZTE are missing from a telecom department certified list of vendors eligible to supply GPON, which is the chosen fibre technology for this project.

In line with its recently unveiled preferential market access norms, DoT has mandated 100% domestic sourcing for this project by 2014-15 on security grounds, and the list of certified GPON vendors reportedly include Himachal Futuristic Communications, ITI, Tejas Networks, C-DoT, VMC Systems, Prithvi Infosystems, Sai Systems, United Telecoms and SM Creative.

Meanwhile,, the department of electronics & IT is dangling several baits before the industry, be it in the form of the modified special incentive packages to start units in electronics clusters where they have been assured a 25% reimbursement on the capex (on some products) or a 30% preference for local industries while sourcing products.

Many domestic players like Tejas Networks are keen on availing the benefits of these MSIPs. "We are waiting for the government to notify the Bangalore cluster to avail of the benefits of MSIPs," says Sanjay Nayak, CEO and MD, Tejas Networks.

Vivek Tyagi, director (India sales), Freescale Semiconductor India, says: "Clusters like Noida do not have a testing facility for electronics. It would be great if two or three players pool in resources to create such a facility." The main reasons for the low growth in the electronics sector is the zero tax on imports of electronic goods which makes it easy for electronic goods manufacturers to source parts from abroad, lack of a level playing field for domestic players and the absence of a Fab in India, says Dr Satya Gupta, chairman of the Indian Electronics and Semiconductor Association. "The policy is finally in place and concrete developments can be witnessed before the end of this year," says Dr Gupta.