Need to increase mandatory local value addition to 70 per cent to boost domestic industry: Sanjay Kirloskar

Twesh Mishra New Delhi | Updated on January 09, 2020 Published on January 07, 2020

Sanjay Kirloskar,Chairman, Kirloskar Brothers Ltd

Government tenders need to have a higher mandatory local content and value addition requirements to support the growth of the domestic industry, a top industrialist has said.

“The mandatory local value addition requirement in government tenders can easily be upped to 70-75 per cent from the existing 25 per cent (in the oil and gas sector) to support the growth of the domestic industry. This provision should be enabled especially in strategic sectors such as oil and gas, and power,” Sanjay Kirloskar, Chairman and Managing Director of Kirloskar Brothers Limited, told BusinessLine.

Highlighting how this can be done by the government, Kirloskar said, “They (the government) can say that I need this kind of equipment, (even if) there are three foreign suppliers, I want two Indian companies to develop this.”



He said the group has made representations to the Centre to increase local content and value addition requirements in tenders. Kirloskar said, “We’ve said pick two or three companies, there are others in India too. Give them a development order...for the fleet ordering programme of the Department of Atomic Energy, two (domestic) companies have got development orders.”

Giving the example of other countries where this provision is there, Kirloskar said the Centre can follow the lead of Saudi Arabia, the US and other countries where similar provisions are in force. “All the countries do this. We should make sure that there are back up Indian suppliers for all the equipment required to set up (at least) the core sector industries,” he said.

He said the need for such a move arises in light of volatile geopolitical developments that may threaten the growth and sustenance of domestic industries.

According to Kirloskar, the Government as the promoter of public sector enterprises can take a call and mandate local manufacturers, designs and suppliers.

“Indian engineering and manufacturing companies face rampant discrimination and most of the times are even barred from bidding for projects in other countries. On the contrary, India imposes no such restrictions on foreign companies selling their products in India and has opened up its markets for one and all,” a note from the group said.

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Published on January 07, 2020
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