Government to review PMA policy for e-goods

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Dr. Manmohan SinghThursday, October 17, 2013: The Indian government will be reviewing the proposed Preferential Market Access (PMA) policy for electronic goods. The policy aims at favoring domestic equipment manufactures for government procurement. In the event the proposal is accepted, it will not be in favour of foreign electronics goods manufacturers.

As per a note, which is meant for the Cabinet and has been reviewed by Business Standard, the ministry of communications and information technology too has suggested that the government will give approval for the part of the policy that makes reservation for 30 per cent of its purchase for domestically manufactured electronic goods.

On July 5, the Prime Minister’s Office (PMO) will keep PMA on hold due to strong protests from international trade associations. The Indian Prime Minister has received written requests protesting against the draft notification for a PMA policy from the US-India Business Council (USIBC) and 37 other associations of foreign telecom firms and electronics product manufacturers. These include entities from Europe, Australia, Asia and the US.

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The policy has also been opposed by the Information Technology Industry Council that represents major foreign technology firms like Alcatel-Lucent, Cisco, Ericsson and Motorola.

As per a new ministry note, the extant policy will not be applicable to electronic products with security implications and a “separate framework” will be developed for the purchase of these products. Moreover, many other provisions on purchase of electronic goods for government use will stay unaffected. The policy also applies to the defense sector. As per government estimates, India imports nearly $40 billion of electronics items.

According to Chetan Bijesure, director and head of the manufacturing division at the Federation of Indian Chambers of Commerce and Industry, “We welcome the continuation of the government procurement policy, as we feel it is important to stimulate the domestic manufacturing activity.”

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