IT industry now pushes for local procurement of 30%
Updated: Jun 15, 2013 10:54:33pm
New Delhi, Jun 15 (KNN) The Ministry of IT and Communications has set a guideline for the telecom and IT hardware suppliers, which requires them to set up a full-fledged manufacturing facility in India if they want to get government contracts.
As per the guidelines, 30 per cent of all equipment supply contracts will be reserved for companies with manufacturing base in the country.
Moreover, the quota for locally made goods will increase over the next few years.
The step has been taken in the backdrop of bringing preferential market access for domestic products in February.
According to a media report, this policy was opposed to by both American and European manufacturers. The Commerce Ministry had also raised concerns over the introduction of a quota system.
However, the IT Ministry has pushed through with the guidelines on grounds of security concerns as well. According to the IT Department, equipment made outside the country may carry spyware that could allow unfriendly countries to watch into India’s communication networks.
The guidelines were issued by the IT Ministry on June-12, and a list of 18 products has been given for which preferential treatment would be given to locally made manufacturers.
This list includes tablets, notebooks, scanners, mobile handset and servers. A list of 24 telecom related gear has also been given, which includes SIM cards, set top boxes and parts for mobile network.
Furthermore, the manufacturers will also be required to add value locally instead of just assembling the products here as most of the hardware makers are only assembling the products due to lack of an ecosystem.
Under the new policy, manufacturers will be forced to source a specific percentage of materials within the country. The amount of value addition required will be brought out by individual ministries and departments at the time of procurement.
Manufacturers are even supposed to give a self-certificate that their product is made in the country while bidding for a government contract. However, if a complaint is received against a manufacturer then it will be investigated by the Telecom Engineering Centre or the Standardisation Testing and Quality Certification.
The Ministry is even working on another policy to bring private companies also under this regulation.
But, the foreign players do not seem to be happy as this move would be against international trade norms.
According to analysts, the mandatory local sourcing may breed the manufacturing sector in the country but can promote overcharging for the local products.
Also, the domestic manufacturing firms will get technologically advanced in order to sustain in the competitive market and will also create employment opportunities here.
But, as a matter of fact, some of the international firms manufacture much more technologically advanced products.
The higher price of the domestic products may even increase the consumers’ phone bills. (KNN)
As per the guidelines, 30 per cent of all equipment supply contracts will be reserved for companies with manufacturing base in the country.
Moreover, the quota for locally made goods will increase over the next few years.
The step has been taken in the backdrop of bringing preferential market access for domestic products in February.
According to a media report, this policy was opposed to by both American and European manufacturers. The Commerce Ministry had also raised concerns over the introduction of a quota system.
However, the IT Ministry has pushed through with the guidelines on grounds of security concerns as well. According to the IT Department, equipment made outside the country may carry spyware that could allow unfriendly countries to watch into India’s communication networks.
The guidelines were issued by the IT Ministry on June-12, and a list of 18 products has been given for which preferential treatment would be given to locally made manufacturers.
This list includes tablets, notebooks, scanners, mobile handset and servers. A list of 24 telecom related gear has also been given, which includes SIM cards, set top boxes and parts for mobile network.
Furthermore, the manufacturers will also be required to add value locally instead of just assembling the products here as most of the hardware makers are only assembling the products due to lack of an ecosystem.
Under the new policy, manufacturers will be forced to source a specific percentage of materials within the country. The amount of value addition required will be brought out by individual ministries and departments at the time of procurement.
Manufacturers are even supposed to give a self-certificate that their product is made in the country while bidding for a government contract. However, if a complaint is received against a manufacturer then it will be investigated by the Telecom Engineering Centre or the Standardisation Testing and Quality Certification.
The Ministry is even working on another policy to bring private companies also under this regulation.
But, the foreign players do not seem to be happy as this move would be against international trade norms.
According to analysts, the mandatory local sourcing may breed the manufacturing sector in the country but can promote overcharging for the local products.
Also, the domestic manufacturing firms will get technologically advanced in order to sustain in the competitive market and will also create employment opportunities here.
But, as a matter of fact, some of the international firms manufacture much more technologically advanced products.
The higher price of the domestic products may even increase the consumers’ phone bills. (KNN)
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