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The Prime Minister’s Office is worried about the IT and Communication Ministry’s policy of encouraging domestic manufacturing.
The PMO has sent the Ministry a note asking for comments on how the policy aims to link manufacturing requirements to national security.
‘Market distortions’
“Efforts to link manufacturing with security is questionable. It will lead to distortions in the market. Security objectives can be met through audits, tests and need to be handled separately,” states the note sent by the PMO.
The Communications Ministry has proposed a policy that makes it mandatory for companies, government institutions and telecom players to buy at least 30 per cent of their electronics and hardware requirements from manufacturing facilities in India.
The policy also stipulates that manufacturers must ensure that value addition happens locally.
The PMO’s note assumes significance in the light of the protests by the US Trade Representatives and the European Commission on grounds that the policy goes against WTO agreements.
Most foreign hardware vendors have also raised objections saying the policy is tantamount to forcing them to set up a manufacturing unit.
The Commerce Ministry had also said the policy would be hard to defend under international trade treaties.
The Communications Ministry has, however, pushed ahead with the policy on the ground that India needs to safeguard its national security and local production would enable law enforcement agencies to better monitor for bugs and spyware embedded in the equipment.
Import savings
The Ministry’s position is backed by local manufacturers which say that the Government should be concerned about the huge import bill arising from importing hardware worth billions of dollars every year.
The PMO, however, wants to know how the policy will be implemented.
“There is no nodal agency to lay down specifications or identify products that should be taken up first and, more importantly, there is uncertainty on which product may get notified,” stated the note.
> thomas.thomas@thehindu.co.in
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