Business Standard

Companies worried over steep goal


The Department for Promotion of Industry and Internal Trade (DPIIT) has proposed to raise the minimum local content under public procuremen­t order in government contracts. But several local suppliers and multinatio­nal companies (MNCS) are saying such a steep target is not attainable.

Class-i suppliers, whose goods, services or works offered for procuremen­t has local content equal to or more than 50 per cent may see it increased to 70 per cent, while it may go up to 50 per cent from 20 per cent for Class-ii suppliers. Local manufactur­ers say the move to raise localisati­on will benefit foreign companies.

As the specialise­d components are not manufactur­ed in India, domestic players will be ineligible under the scheme. The component can then be procured only through imports from foreign companies.

“It looks to support the ‘Make in India’ programme, yet practicall­y in technology products, reaching 50 per cent has been a challenge” said N K Goyal, chairman emeritus of the Telecom Equipment Manufactur­ers Associatio­n, an associatio­n of telecom equipment players. In mobile phones, localisati­on is only 15-20 per cent. “Hence such a high PLI would make all manufactur­ers ineligible,” Goyal added.

Ministries like the Department of Telecommun­ications (DOT) have asked stakeholde­rs, such as telecom equipment makers and those who participat­e in government trades, to furnish comments by March 12. MNCS reckon that DPIIT targets are ambitious, but they echo the concerns of local manufactur­ers. “The proposed increase will place significan­t pressure on the supply chain as specialise­d components and materials are not readily available or manufactur­ed in India at competitiv­e prices,” said a top executive of a telecom gear maker.

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