From October 1, 2013, mobile service providers can only import blank subscriber identification modules (SIM cards). They will have to do the loading of operating systems and other software in India. And from October 1, 2014, onwards, they will have to do everything here - right from manufacturing SIM cards from piece parts or raw material level to loading of software.
Currently, mobile service providers import software-embedded SIM cards.
According to DoT estimates, more than 30 per cent of the SIM cards are currently imported under the open general licence (OGL) from different Asian countries, including China.
In a recent notification, the Department of Telecommunications (DoT) said that service providers can import blank SIM cards in the first year of the implementation of the Policy for Preference to domestically manufactured telecom products in procurement. The policy will come into force from October 1. Loading of operating systems in India will be considered as 25 per cent value addition, according to DoT.
According to the notification on the preferential market access rules, value addition for SIM cards should be 30 per cent in 2014-15, 35 per cent in 2015-16 and 45 per cent by 2019-20.
Earlier, DoT had recommended that mobile service providers should manufacture the SIM cards in India with indigenously designed chips incorporating specific laid down standards. DoT's contention was that imported SIM cards could be a major threat to the national security as these might have been produced with malicious embedded software.
DoT has also recommended that the clause should also be included in the proposed Cyber Security Policy.
The government is worried that the embedded software can turn the SIM cards into a mini computer, which may lead to abuse and misuse of information. Telecom companies have to provide the encryption keys to the manufacturers for personalisation of the SIMs as part of the standard trade practice. And by using the encryption keys, SIM cards can be cloned, which could put the nation's security at risk.