HFCL plans for making CDMA handsets get delayed

Awaiting clearance
Qualcomm gave licence to HFCL to manufacture CDMA handsets in September last.
HFCL sources say it is only a matter of time before the necessary approvals come through.

Himachal Futuristics Communications Ltd's plans for manufacturing CDMA handsets in India have hit a bump with Government approvals yet to come in. Qualcomm had given the licence to HFCL to manufacture CDMA handsets in September last year.

While HFCL was hoping to roll out the first batch of handset by April this year, the project has now got delayed, as the relevant approvals from the Government have not come through.

The project has got stuck because the Government gives automatic approval to companies setting up manufacturing base in the country only if the total outgo of foreign exchange is not more than 5 per cent of the cost of value-added locally. In the case of HFCL, Qualcomm is taking a royalty equivalent to 5 per cent of the sale price of the end product.

`Matter of time'

In this case the difference between the amount calculated is almost 100 per cent. While Mr Mahendra Nahata, Chairman, HFCL, was not available for comment, company sources said it was only a matter of time before the necessary approvals come through. Qualcomm sources said it was up to HFCL to decide on when it plans to start manufacturing.

HFCL was the first Indian company to get a licence from Qualcomm to develop, manufacture and sell CDMA mobile handsets and other devices.

The move was aimed at making CDMA handsets cheaper in India.

The announcement was made when country's largest CDMA operator Reliance Communication announced plans to acquire a pan-India licence for offering cellular services based on the GSM technology.

Reliance had cited lack of cheaper CDMA handsets as one of the reasons for shifting to GSM.

However, since then Reliance itself has entered into agreements with Chinese handset manufacturers to make handsets available at less than Rs 1,000.

Meanwhile, Qualcomm has announced that it has signed licence agreement with US-based DigiBee Microsystems Inc for manufacturing CDMA handsets and modem cards. Though the licence is for addressing the worldwide market, DigiBee will initially focus on products for the Indian market.

Source : Business Line