Online monitoring of PMA ready, ministries in process of coming on-board

The preferential market access (PMA) policy reserves 30% of all govt procurement for items which can show a pre-defined percentage of domestic value-add

After the directive from the Prime Minister’s Office (PMO) to  enforce a policy that reserves around one-third of government procurement for domestically manufactured electronics and telecom products, a portal has been put in place to monitor the procurement in real time.

However, the Department of Electronics and Information Technology (DEITY), which is managing the online system, said it was difficult to say how much was actually being domestically procured as reports from other ministries and departments had not started coming in, in large numbers.

It would take another month to gauge the actual impact of the diktat from the PMO, said a government official. The controversial preferential market access (PMA) policy, which was notified last year, reserves 30 per cent of all government procurement for items which can show a predefined percentage of domestic value-add. The percentage of domestic value add increases by five per cent each year.

In a statement released on December 27, 2014, the PMO had said, “In an important step to boost electronics production, as part of Prime Minister Narendra Modi's Make in India initiative, the Union Government has issued strict guidelines to all ministries to provide preference to domestically manufactured electronic products in government procurement.”

It added that all ministries and departments should identify department-specific domestically manufactured electronic products for procurement, and notify them within a fortnight. However, the official said even as ministries were making an effort to come on to the online monitoring system, it was unlikely that it would come up with ministry-specific lists of goods to be procured domestically. So far the list of items which have to be mandatorily procured under this policy are 10 from the DEITY and 23 by the Department of Telecom and include the likes of laptops, desktops, dot matrix printers, LED lights, smart cards and biometric devices.

Once fully operational, the system will be able to present a break-up of domestically manufactured electronic equipment by value in the country.

Despite the push from the PMO, which according to the official, has made ministries much more “serious”, there is no respite from the fact that some parts of the policy are impossible to implement at the moment.

There are products like LED lights and smart cards which are easy to procure in the country as there are companies already manufacturing them. However, showing significant domestic value-add in items such as desktops and laptops is a tall order since almost the entire industry is dependent on imports and just a handful of companies assemble the products here after importing components.

Officials from the multinational PC companies said this fact made it impossible for the government to find any local players and therefore there was no impact of the PMA on foreign players. Companies expect status quo in the near future unless the government takes some big bold steps to change the manufacturing ecosystem in the country.

All major companies were keenly looking at India for their manufacturing needs, said S Rajendran, chief marketing officer of Acer India. “The reforms right now are so positive, the arguments are so logical, so as soon as there is some movement in the needle, the investments will flow,” he added.

However, that will require more than just tax sops. “Labour laws, stability of the tax structure, infrastructure support are some of the roadblocks that need to be addressed on an urgent basis,” said Rajendran.