PMO puts on hold policy to push domestic manufacturing

The government today put on hold the preferential market access (PMA) policy that provided for sourcing of sensitive telecom and electronic equipments and technology from domestic manufacturers over security concerns.

The decision was taken at a high-level meeting in Prime Minister's Office that was attended by National Security Advisor Shivshankar Menon, Principal Secretary to the Prime Minister Pulok Chaterji, Telecom Secretary M F Farooqui and top bureaucrats of different ministries.

The policy has been put in abeyance till further order on security grounds, sources told PTI.

The PMA policy makes it mandatory for the government to procure a certain percentage of its requirements from domestic manufacturers.

Sources said it was felt that encouraging indigenous manufacturing at the cost of new and better products would lead to distortions in the market.

A moratorium on implementation of the policy has now been imposed till adequate assessment of manufacturing capability for products that qualify for domestic value addition is made.

The Cabinet had in February last year approved the policy keeping in view security issues and threat of cyber espionage. It was envisaged to push manufacturing capabilities in the country to reduce dependence on imports, especially in the strategic fields like defence and telecom.

PMA policy had seen opposition from various foreign trade associations, including industry body Information Technology Industry (ITI) Council which represents major foreign technology companies like Alcatel Lucent, Cisco, Ericsson and Motorola.