From "Make in India" to "Buy in India": domestic firms to get boost

13 May 2017

Prime Minister Narendra Modi's 'swadeshi' policy seems to be enlarging its scope from 'Make in India' to also 'Buy in India'. Reports today said a mega policy is in the works for several key sectors where domestic procurement should be given preference.

According to The Economic Times citing sources, the government will bring out a full-fledged price preference policy favouring Indian-owned companies. The policy, likely to be finalised by end of May, is being driven by the Prime Minister's Office and is aimed at boosting Indian enterprises across sectors.

Preferential pricing is expected to allow additional time to Indian-owned companies so that they can match the lowest bid by an entity that's partly Indian-owned or mostly foreign-owned.

Business Standard cited its sources to say that the PMO recently had a meeting on the contours of the proposed policy.

The sectors that the new policy could cover are likely to be those where the government is the largest consumer, such as engineering, machinery and paper among others, the BS report said.

Cement is another such sector but most of the consumption in the sector is from domestic manufacturers in any case.

The union government already incentivises local procurement in areas like petroleum and steel, but the new policy is expected to be much larger in scope.

Any policy on preferential domestic procurement could imply job creation, a priority area for the Narendra Modi government. Despite signature schemes such as Make In India and Start Up India, job creation has remained a problem.

In the run-up to a comprehensive policy on preferential treatment for domestic procurement, the government has over the past two months announced some initiatives on those lines.

Earlier this month, there was a policy on preference for sourcing of domestic iron and steel for infrastructure projects by state-owned companies, seeking to shield the sector from dumping of cheaper metals by China in particular.

Also, the ministry of electronics & information technology announced a phased manufacturing programme to promote Make in India, but with a thrust on local sourcing.

In March, the finance ministry released the new General Financial Rules which brought in Rule 153, which mandates government departments to give first preference to ''locally manufactured goods or locally produced services''.

In April, the Union cabinet approved purchase preference given to domestic manufacturers in procurement by state-owned oil and gas companies. Before that, in March, the government announced a restructured general finance rules for public finance, including government procurement, to give first preference to locally manufactured goods.

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