Cabinet cleared revised Preferential Market Access (PMA) for electronic equipments

The Cabinet approved a revised version of the Preferential Market Access (PMA) policy that will apply to the supply of electronic and telecom equipment that has security implications. Preferential Market Access (PMA) policy linked to telecom equipment and other electronic products having security implications has been cleared.

What is Preferential Market Access (PMA) policy?

PMA policy will severely restrict the market participation opportunities for foreign companies in key sectors of the Indian economy. The policy requires certain domestic content percentages in public procurement contracts and in commercial transactions where electronic products raise security concerns. It will give support to Indian players and it will enable entrepreneurs to start their own product companies.

PMA provides for sourcing of sensitive telecom and electronic equipments and technology from domestic manufacturers over security concerns. PMA makes it mandatory for the Government to procure a certain percentage of its requirements from domestic manufacturers. The policy is designed keeping in mind the security issues and threat of cyber espionage. It is envisaged to push manufacturing capabilities in India itself, thus reducing dependence on imports, especially in strategic fields like defence and telecom.

What does Govt fear? Why need for PMA policy?

Govt fears that there is a possibility of malicious codes being implanted during manufacturing, after installation of the electronic items in the network, or some time in between. Thus, Department of Electronics and Information Technology (DeitY) has stressed that PMA applies to procurement for both government entities and entities that impact national security.  In January 2013, the Department of Telecom (DoT) circulated a list of 14 “security-sensitive” telecom products, and proposed to mandate its sourcing to Indian companies alone.

India’s telecom industry at present relies heavily on imports to meet its requirements. As per TRAI, India-made products form only 3% of the market. India imports about electronic items worth US $40bn every year. The National Electronics Policy forecasts such imports to touch a humongous USD 300 billion by 2020 if efforts are not made to produce hi-tech products in India.

Month: Current Affairs - October, 2013