The Cabinet on Thursday approved a revised version of the preferential market access (PMA) policy for electronic and telecom equipment which would allow suppliers, including foreign telecom companies (telcos) and electronic product-makers, to sell to various government wings, including defence forces.
The revised policy, which is seen in certain quarters as having security-related implications, reverses the previous version of February 2012 that bestowed access to government buyers only to domestic firms that manufactured electronic products.
The revision came about in the wake of strong opposition to the 2012 policy from US-based groups.
The US-India Business Council (USIBC) and 37 other associations of foreign telecom firms, including companies from Europe, Australia, Asia and the US, had been writing to Prime Minister Manmohan Singh expressing concern over the restricted access.
In response, the Prime Minister’s Office had asked the Department of Telecommunications to revisit the 2012 policy and exempt telecom equipment or other technology products procured by the private sector. It also asked for inclusion of the defence sector within the purview of the policy.
According to the India Semiconductor Association, the Indian electronic system design and manufacturing or ESDM, and the semiconductor industry, are on a growth trajectory of 9.9% compounded annual growth rate or CAGR, and will likely register a turnover of $94 billion ( Rs 5.1 lakh crore) in 2015, up from $65 billion in 2011.
Manufactured products alone will account for $79 billion, while related services will contribute $15 billion in 2015, as against $56 billion and $9 billion in 2011.
Given the gigantic size of the market comprising government procurers, and amid the general perception that India has been less than friendly toward foreign companies, the revised PMA policy could well prove to be one of the major initiatives taken by the government in the last two years, informed sources said.
The new policy would also ensure an improved electronics manufacturing ecosystem in the country, they said.