India has slashed the security certification fee for telecom equipment makers, the latest in a series of regulatory moves to ease business compliance requirements for companies importing or making telecom and tech equipment or products indigenously.
Companies such as Nokia, Ericsson, Cisco Systems Inc., HFCL Ltd, and Dixon Technologies (India) Ltd will benefit from the government’s decision to cut the fee by up to 95% for more than 50 categories of telecom and tech products.
These include routers, connected devices, satellite equipment, smart meters, optical fiber cables, and 5G and WiFi gear, according to a government official and an internal document reviewed by Mint.
“Testing of telecom equipment is a key requirement,” the official said, declining to be identified. “The current downward revision in pricing pertains to the fee paid by the companies to the government to get certification, which is also known as security test report evaluation fee.”
A telecom or tech equipment maker or importer needs to engage a lab designated by the government to test its products and ensure the devices are safe for users and secure for communication networks.
The government will later issue a security certificate if satisfied with the lab’s report. Effective 1 August, the cost for this certification has been slashed to ₹10,000-50,000 per equipment model from ₹2-3.5 lakh.
The National Centre for Communication Security (NCCS) on 30 June circulated a note to Department of Telecommunications officials informing about the reduction in the security test report evaluation fee.
“On an average, the overall cost for testing comes to ₹60-65 lakh per unit, which largely includes the third-party lab-testing costs,” said Paritosh Prajapati, chief executive and founder of Sweden-based broadband equipment maker GX Group, which is a beneficiary of India’s productivity-linked incentive scheme for the telecom sector.
“While this reduction in certification fee now is a breather, there is also a need for the government to increase testing labs and increase their capacity,” he added.
Key Takeaways
- India has cut security certification fees for telecom and tech equipment to ₹10,000-50,000, down from ₹2-3.5 lakh, benefiting over 50 product categories.
- Companies like Nokia, Cisco, HFCL, and Dixon stand to gain from lower compliance costs, aligning with India’s ease-of-doing-business goals.
- Despite the cost relief, the telecom industry continues to face hurdles such as limited testing lab capacity and lengthy certification timelines.
A time-consuming process
The relaxation in testing and certification costs for telecom companies comes at a time when India is engaged in key trade negotiations with the United States, even as the US announced a 25% tariff plus a penalty on Indian goods from 1 August.
In March, the US Trade Representative (USTR) had raised concerns about India’s testing and certification system. The concerns included limited testing capacity, a slow and complex registration process, cancellations over non-safety issues, and high compliance costs.
“The US government has recommended that the Indian Government recognize internationally accredited labs, harmonize labeling requirements withglobal practices, harmonize the validity period of test reports and certification, and eliminate retesting requirements,” USTR said in its report.
India has seven designated telecom security testing labs, and has issued 92 security certificates so far, NCCS data show. HFCL, Cisco, Dixon Electro Appliances, and Hewlett Packard Enterprise, among others, have applied and received security certifications for different products.
While India launched the Communication Security Certification Scheme in 2020 to streamline the process, there have been delays in implementing rules related to certification.
Also, as telecom equipment makers raised complaints about inadequate testing capacity and a cumbersome registration process, the scheme has not been universally applied across the telecom ecosystem.
While the government’s decision to reduce the security certification fee will help the industry, “the more challenging part is the time consumed in this process of testing, which also needs to be brought down”, said Konark Trivedi, founder and managing director of telecom equipment maker Frog Cellsat Ltd.
The industry also needs a system to ensure that every equipment entering the country meets the government’s security criteria, he added.
Ease of doing business, but at what cost?
Apart from a security certificate, telecom companies are also required to obtain a trusted source certification from the National Security Council Secretariat, and mandatory testing and certification of telecom equipment, which is issued by the Telecommunication Engineering Centre.
On 7 April, the National Centre for Communication Security excluded products related to optical network terminals and optical line terminals from mandatory testing and security certification, and including them under the voluntary security certification regime till 31 August.
NCCS also waived administrative and security test evaluation fees for the period.
An optical line terminal is the main device at a telecom provider’s end that manages data flow over fiber networks. An optical network terminal is the device at the customer’s home that converts fiber signals into internet and other services.
The fee reductions were part of the government’s efforts towards improving ease of doing business in India for global telecom equipment makers.
On 15 July, Mint reported that India had dropped its demand that telecom equipment suppliers hand over proprietary source code, a key piece of software that controls the working of an equipment. Instead, manufacturers are required to provide just a summary of internal security test results.
However, local gear makers expressed concerns sustained pressure from multinational companies may have influenced the government’s decision to relax its source code sharing and certification requirements.
