The Narendra Modi government, which has already made its thoughts regarding indigenous manufacturing pretty clear, could be putting the final touches on a price-preference policy that will favor India- owned company over their foreign counterparts. The policy if implemented, could give a significant boost to the Make in India initiative.
The news comes from ET, which cites inside sources who chose to remain unnamed. A preferential pricing policy could give additional leverage to Indian companies as they compete against foreign entities on their home turf. The policy will help Indian enterprises while they are applying for government entities and purchases.
The policy will also provide incentives for, and even mandate the use of local components in different industries and procurement areas. These are all part of a greater picture that sees the Modi government attempting to boost manufacturing and production by Indian companies. The move is being seen as the Indian government’s attempt to pave the way for an eventual Buy Indian act that would be similar to 1933’s Buy American act.
The Buy American Act was passed in 1933 by Congress and signed by President Hoover on his last full day in office (March 3, 1933),required theUnited States government to prefer U.S.-made products in its purchases. Other pieces of federal legislation extend similar requirements to third-party purchases that utilize federal funds, such as highway and transit programs.
The finance ministry had already released the new general finance rules back in March, that allowed government department to give preference to local goods and services. A month later, the union cabinet extended the same policy to PSUs under the oil ministry. Earlier this month, the government approved another policy that stipulated that preference could be given to iron and steel products manufactured in the country, where government procurement was concerned.
Such a policy when — and if — passed, could provide several benefits. For one, manufacturing within the country would receive a big boost and this in turn could lead to large scale job creation. We will try and dig up more details on this as soon as possible.
