BharatNet row: “Changes” in tender clause meant to favour foreign firms

Prime Minister Narendra Modi advocates a Atma Nirbhar Bharat (self-sufficient India), but the Tamil Nadu government looks to favour foreign firms in allotting broadband connectivity under BharatNet programme by eliminating domestic players.

Activists have criticized the state’s new tender process for BharatNet, saying it has provisions that favour foreign firms over the local ones. They said the changes introduced in the tender clauses in the last 10 months have further delayed the much-needed project that can revolutionise village connectivity.

In order to provide broadband connectivity to all the gram panchayats across the country, the UPA government had launched National Optical Fibre Network Programme in 2011. It was renamed BharatNet in 2015.

“Jayalalithaa had planned to take internet service to the panchayat levels even before the Optical Fibre Network Programme was conceived in 2011. The idea was triggered by the fact that e-centres are mostly restricted to municipalities and corporations,” said S Nandakumar, general secretary, Thanaatchi, an organisation working towards local body governance.

In order to reduce the dependency on bigger cities, the state then built ‘Village Service Centre’ buildings across the state. These buildings were supposed to act as ‘e-centre at village level’. “While some centres managed to get net connectivity on their own, slow speed remained an issue. Most of these centres have closed down and are no longer in use. If BharatNet project is realised, it will help the gram panchayats in improving governance. School students, who are confined to homes and have to rely on online classes, will benefit the most,” said Nandakumar.

In Tamil Nadu, the Tamil Nadu FibreNet Corporation (TANFINET) has been entrusted with the responsibility to implement the BharatNet programme in 12,524 gram panchayats. TANFINET comes under the state Information Technology department, headed by minister RB Udhayakumar. In December 2019, the state had floated tenders for the first time. Former IAS officer Santhosh Babu was the principal secretary of the department then.

The initial tender for this Rs 2,000 crore worth project was more open and encouraged competition. People in the know say that if the state has gone according to the tender, it would have completed the project in December 2020. However, it is said that Santhosh Babu was pressured to change some clauses in the tender so that the government could favour “particular companies”. However, Santhosh Babu refused to do so and offered to resign instead. This created flutter in the official and media circles, following which he was transferred to the Tamil Nadu Handicrafts Development Corporation Limited.

Opposing the changes in clauses of tender, Chennai-based Arappor Iyakkam, an organisation working towards eliminating corruption, filed a complaint with the Department for Promotion of Industry and Internal Trade (DPIIT) saying the changes are “anti-competitive and arbitrary”.

Arappor Iyakkam’s complaint said the clauses related to ‘turnover’ of a bidding company have been changed such that the cumulative turnover requirement for the last 3 financial years was changed to average annual turnover for the last three financial years. Earlier, the tender had a clause which meant a company is eligible to bid if its cumulative turnover in the last three financial years is nearly Rs 600 crore. But after the change, the company was required to have an annual turnover of Rs 600 for 3 years. Likewise, the ‘experience’ clause was changed as well. The minimum experience requirement for laying fibre optic cable was increased from 5,000 kms to 15,000 kms.

The state then argued that it had changed the clauses so that a big company can complete the work within 11 months. But DPIIT, taking cognisance to the complaint, cancelled the tender in June stating the Corrigendum is “discriminatory and restrictive”. The state has said that it would come up with a fresh tender immediately.

After a three months delay, the state has issued a new tender in October. The final date for receiving the tender is November 11.

“In the new tender the TANFINET had reversed many of the discriminatory and restrictive tender eligibility criteria. They have brought down the average annual turnover requirement to Rs 200 to Rs 250 crores, while it was Rs 600 crores last time. Similarly, they have brought down the experience of fiber optic laying from 15,000 kms to 4,000 kms. However, TANFINET has introduced some new clauses on the technical side that restricts and kills the competition completely,” said Jayaram Venkatesan, convenor of Arappor Iyakkam.

For executing the project we need ‘routers’, a networking device for internet connectivity. A total of 12,500 gram panchayat routers (GP routers), 388 Block routers and 2 network operation center (NOC) routers are needed.

“The configuration of these three routers are different. There are many domestic manufacturers who make and supply quality GP and Block routers. But for NOC routers we have to depend on foreign players. The tender says that all the GP and Block routers should be purchased from Original Equipment Manufacturer (OEM) who supplies NOC routers. By this clause, all the domestic manufacturers will be eliminated” said Venkatesan.

He also added that in order to get uninterrupted internet connectivity the non-blocking capacity should be more than the interface.

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“The number of block routers have been brought down from 1,515 in the previous tender to 388 in the current tender and the interfaces have been increased. Though it is their prerogative to do so, it is completely illogical for them to have a block interface of a total of 568G, while the minimum non-blocking capacity has been set at 400 Gbps only. In the previous tender it was 258G of interface and 294 Gbps capacity. If a router costs Rs.10 lakh if it is purchased from a domestic player according to initial tender, the router will now cost Rs.35 lakh since it is purchased from foreign firms. So cost wise, the purchase of routers according to initial tender and the current tender may be more or less the same. It is undecipherable then, why the government has changed the interface and non-blocking capacity ratio when the router cost is almost the same. It could have retained the 258G interface and 294 Gbps capacity ratio” he added.

The state should make necessary amendments to the tender so that a lot of domestic players can compete. It must also extend the tender submission deadline, until an action is taken on our complaint, said Venkatesan.