Domestic Manufacturers may lose out to Domestic ‘Importers’ if the government’s new PMA Policy is approved.
A storm is brewing for the last couple of months in the Indian telecom manufacturing industry because instead of encouraging import substitution, the Indian government has drafted a proposal which will make the playing field even more uneven, in favour of foreign electronic goods and services.
So far, at least 30% of the total quota in government procurement of electronic products (manufacturing) is reserved for domestic manufacturers – a policy termed ‘Preferential Market Access' (PMA). However, the latest proposal allows any domestic player to take benefit of this policy, even if they fully import foreign products, simply by committing an investment of 1 billion USD. If this is introduced, a very thin line will separate a manufacturer from an importer. “Many are perplexed that this amendment may stifle the aspirations of the large domestic electronic industry players who have already made huge investments in innovation and manufacturing of products,” says Sanjeev Kakkar, Chief Strategy Officer, VNL.
“As one reads the terms of the draft proposal—some inconsistencies vis-a-vis the original policy are obvious. These new amendments have a tendency to provide the preservation of an element of special and differential treatment to those foreign investors who qualify under this category.” He adds.