Rethinking on PMA can adversely impact economy: ISEA

PTI New Delhi | Updated on July 09, 2013

The Government’s move to revisit the Preferential Market Access (PMA) policy that gives a push to sourcing of ‘Made in India’ technology products, can have adverse impact on nation’s economy, industry body IESA said today.

“The recent announcement from the Government that certain clauses of the PMA policy are being ‘put on hold’ signals an unwarranted policy rethink which could adversely affect India’s Current Account Deficit in the short term,” India Electronics and Semiconductor Association (IESA) President PVG Menon said in a statement.

The PMA, approved by Cabinet in February 2012, mandated a phased increase in procurement of domestically made products to curb any security threats, a clause that was opposed by international trade associations besides the domestic telecom industry.

The Prime Minister Office on Monday, in a statement announced putting on hold part of the policy that talked about procurement by private firms.

“The entire policy on Providing Preference to Domestically Manufactured Electronic Goods (PMA Policy) will be revisited and reviewed,” it added.

CAD, which occurs when total imports of goods, services and transfers is greater than the exports, had hit a record high of 4.8 per cent of the GDP in 2012—13.

The government’s own estimates in National Policy of Electronics states that demand of electronics in the country will reach $400 billion by 2020.

It said in the absence of corrective measure, electronics imports will account for $300 billion by that period.

IESA President added that the rethinking on PMA could lead to confusion among investors as it was likely to impact series of schemes and policy approved by government.

“The recent announcement from the Department of Electronics and Information Technology of a pipeline of Rs 5,000 crore of investment proposals under M—SIPS (Modified Special Incentive Package Scheme) was based largely on the market pull provided under PMA. This announcement of putting parts of the PMA policy ‘on hold’ can signal confusion,” he said.

Menon said the move by government on PMA “will encourage imports and not provide any motivation for domestic manufacturing of electronics.”

IESA, formerly Indian Semiconductor Association, along with Frost and Sullivan were the first to prepare estimates about Indian electronics industry which was referred to by the government.

Published on July 09, 2013

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