Piyush Goyal Mulls Amendments in Procurement Guidelines to Boost Local Suppliers

New Delhi, Sep 30 (KNN) In a push to strengthen India's local manufacturing ecosystem, Commerce and Industry Minister Piyush Goyal hinted at potential amendments to the government procurement policy.

Addressing companies benefitting from the Production Linked Incentive (PLI) scheme, Goyal emphasised the need for a sector-wise approach in procurement policies.

“There are certain sectors where the ecosystem takes time to develop. Initially, the value added is less, but gradually it increases. We are examining whether we can create a roadmap for these sectors so they can transition to become Class 1 or Class 2 suppliers,” Goyal remarked.

As defined by the Department for Promotion of Industry and Internal Trade (DPIIT), Class 1 suppliers are entities whose products consist of at least 50 percent local content. 

Class 2 suppliers have a local content of more than 20 percent but less than 50 percent.

Goyal acknowledged that current procurement policies typically require prior experience for suppliers. However, the government is exploring alternatives for manufacturers of new and innovative products to be eligible for procurement contracts. 

“We are looking at ways to make these manufacturers eligible through laboratory testing or other methods. We have asked sectors to provide feedback so we can consult technical experts on the feasibility of this approach,” he said.

Meanwhile, the Ministry of Commerce and Industry announced that actual investments under the PLI scheme reached Rs 1.46 lakh crore by August 2024, with expectations to surpass Rs 2 lakh crore within the next year. 

This investment has resulted in production or sales worth Rs 12.5 lakh crore and created approximately 9.5 lakh jobs, a number expected to hit 12 lakh in the near future.

Exports under the scheme have exceeded Rs 4 lakh crore, with sectors such as electronics, pharmaceuticals, and food processing making significant contributions. 

Mobile phone manufacturing now accounts for half of India's electronics output, with exports tripling since FY21. Emerging sectors like drones have seen a sevenfold increase in turnover, driven by MSMEs and startups.

The ministry also highlighted advances in the medical devices sector, where local production has been bolstered by technology transfers for critical equipment like CT scanners. 

Additionally, the food processing sector has contributed to sustainable agricultural practices through the production of millet and organic products.

(KNN Bureau)