The Hindu Business Line : Centre mulls price preference for domestically-made goods

The Department of IT is learnt to have written to the Department of Expenditure to issue suitable guidelines/directions to various Departments and Ministries to this effect.

Moumita Bakshi Chatterjee

New Delhi, Sept. 11 The Government is mulling norms for preferential treatment to domestically-manufactured IT goods in procurement of electronics and IT products including computers, by various Ministries under the Centre.

The Department of IT is learnt to have written to the Department of Expenditure recently to issue suitable guidelines/directions to various Departments and Ministries to this effect. The move is expected to give a massive push to hardware manufacturing activities in India.

Domestic market vital

“India has the potential to develop and manufacture electronics and IT hardware for global market and gain global share besides meeting the country’s future requirement in IT, communications and entertainment. To meet the challenge of globalisation it is essential to develop a domestic market,” a senior official in the Department of IT said while pointing out that the Government buying was known to be a significant catalyst in triggering domestic consumption.

Currently, there is no clause for preferential treatment or price preference for domestically-manufactured IT products in Government procurement and tenders are based on the lowest bids (L1 and L2).

CAGR at 15%

The Indian electronics and IT hardware sector has grown at a Compounded Annual Growth Rate (CAGR) of 15 per cent in the last five years reaching production of Rs 66,000 crore in 2006-07.

The estimated consumption of hardware in 2006 was pegged at Rs 132,000 crore, and the balance demand was met through imports.

Moreover, the electronics and hardware manufacturing sector has been identified as a thrust area by the Government.

Last year, a joint study between India Semiconductor Association and Frost & Sullivan had suggested the consumption of electronic goods would grow to $363 billion by 2015 from $28 billion in 2005.

It also suggested that the country would use $36-billion worth of semiconductors in 2015, and that the industry would become one of the largest employers, creating 3.6 million direct jobs and an additional 5.6 million related jobs, with a combined impact of nearly 28 per cent on India’s GDP.