Govt to review preferential market access

After putting the 'preferential market access' policy on hold, the government on Monday said it will "review and revisit" the policy of asking companies, mainly in the telecom sector, to compulsorily source domestically manufactured electronic goods.

The PMA mandated a phased increase in procurement from domestic manufacturers for telecom companies, among others, a clause that was opposed by international trade associations besides the domestic telecom industry.

The mandatory sourcing requirement for the private companies was put on hold on Friday and today the Prime Minister's Office (PMO) in a statement said the policy was being reviewed.

"The entire policy on Providing Preference to Domestically Manufactured Electronic Goods (PMA Policy) will be revisited and reviewed. The overall policy on PMA will be recalibrated and submitted to the Cabinet," the statement said.

The Preferential Market Access Policy approved by cabinet on February 2, 2012 called for providing preference to domestically manufactured electronic products, in procurement of those electronic products which have security implications for the country and in government procurement for its own use.

The policy has seen major opposition from US based groups where the government itself has limited imports of technology product from Chinese companies on security grounds including cyber espionage threat.

The PMA Policy has two aspects, one relating to government procurement and the other relating to private sector procurement. While the government has issued some notification on sourcing of certain products, it has put on hold all the notifications that are to be issued with respect to private sector procurement.

"No notifications on PMA in the private sector on security related products will be issued till the PMA Policy is reviewed and any notifications in the draft stage will be withheld," the statement said.

PMO has called for major change in the new PMA Policy of removing the entire clause regarding preference to domestic manufacturer on security related products that are to be used by private sector.

"The revised proposal on PMA in the private sector for security related products will not have domestic manufacturing requirements, percentage based or otherwise," the statement said. The PMO has asked Department of Electronics and Information Technology to "bring a final Note to the Cabinet on the revised policy within 4 weeks."
The statement said: "Concerns have been raised in many quarters on different aspects of the PMA Policy, particularly policy relating to procurement by the private sector for electronic products with security implications."

Meanwhile, industry body Telecom Systems Design and Manufacturers Association which represents Indian telecom gear makers has alleged that "certain vested interests at the behest of foreign manufacturers are trying to challenge the policy and lobbying hard, perhaps with the aim to paralyse government's efforts to protect the national security interest".

TSDMA said that current telecom systems are highly sophisticated, using complex chips with millions of elements along with long software codes. The association said "it is very easy to implant spyware/malware in hardware and software, which is impossible to detect but can easily intercept sensitive information or cause catastrophic damage to critical equipment."

India's telecom industry relies heavily on imports to meet its requirements.

According to telecom regulator Trai, only 12-13 per cent of all local products made with the aid of foreign vendors were used in the sector during 2009-10. However, purely India-made products formed just 3 per cent of the market.

The policy is seen as a key step to push domestic production of electronics equipment. The country imports electronics items worth about $40 billion, according to electronics industry association ELCINA.

The National Electronics Policy forecasts such imports to touch a massive $300 billion by 2020 if efforts are not made to produce hi-tech products in India.