Phased manufacturing programme may be extended to other sectors

The government might allow tax incentives and tariff intervention for more sectors, on the lines of the phased manufacturing programme (PMP) aimed at boosting mobile phone production.

This might be a logical step forward from the government policy of preference to domestic companies in government procurement, said Ramesh Abhishek, secretary of the Department of Industrial Policy and Promotion (DIPP).

Under the PMP, developed by the ministry of electronics and information technology and announced last month, the government aims to enable large-scale manufacturing of mobile phones, one of the largest selling consumer goods. Sub-parts such as mechanics, microphones, receivers, keypads and USB cables, among others, have been targeted. By industry estimates, only about two per cent of value addition is done in India in mobile phone manufacturing. Raising that figure over the next 10 years is the PMP's aim. The plan was proposed by a panel of the industry and the government.

A public procurement policy, also announced last month, mandates that only local suppliers will be eligible for procurement of goods and services above Rs 5 lakh, if the nodal ministry decides there is sufficient local capacity and competition. The move is aimed at giving a substantial boost to domestic manufacturing and services, apart from stimulating the flow of capital and technology into a sector.

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