In Short:
The DPIIT has amended the PMI policy to mandate firms to adhere to local content and procure products under the PLI scheme. This move comes before the Union Budget 2024-25. The policy defines local content and procurement rules for contracts involving multiple items. Verification of local content is required for products worth less than Rs 10 crore. The telecom department must release the PMI policy for preferences to apply.
Department amends Make in India policy to boost local manufacturing
The Department for Promotion of Industry and Internal Trade (DPIIT) has made changes to the public procurement policy in favor of Make in India. The new amendment mandates firms to use local content and procure products manufactured under the Production Linked Incentive (PLI) scheme.
New Guidelines
Manufacturers producing items under the PLI scheme will be considered as deemed class II local suppliers unless they meet the minimum local content requirements set for class I suppliers.
This policy will be effective for a specific time period determined by the concerned PLI ministry.
Additionally, imported items sourced locally from resellers or distributors will not be classified as local content.
Impact on Contracts
The amended policy also specifies that for contracts involving multiple items, the weighted average of all items will be considered in calculating the local content.
Items with sufficient local capacity and competition must be sourced from class I local suppliers in system integration, EPC, or turnkey contracts.
Enforcement and Verification
The new rules do not apply to orders valued below Rs 5 lakhs. Suppliers are required to self-certify local content for products worth less than Rs 10 crore.
The DPIIT will investigate cases of restrictive or discriminatory conditions against domestic suppliers by public sector entities.
Industry Response
RK Bhatnagar, Director General of VoICE, praised the amendments, stating that it addresses long-standing concerns regarding EPC contracts and local value addition.
He emphasized the importance of the telecom department releasing the PMI policy to ensure these preferences apply to identified products.
Domestic industry groups in Delhi welcomed the changes, highlighting the need to prevent imported products from bypassing local manufacturing requirements.
The amendment aims to boost local manufacturing and strengthen the Make in India initiative.
