Govt mandates 30% local sourcing for electronic security products

KOLKATA: The government has finalised preferential market access (PMA) norms that mandate a minimum 30% domestic sourcing of security sensitive electronic products by all central ministries/departments, excepting defence. 

"The minimum percentage of domestic procurement for any notified electronic product with security implications is 30% to encourage local manufacturing," says the department of electronics & IT (DeitY) in a final version of the draft PMA norms, a copy of which was reviewed by ET. 

Domestic procurement rules will be particularly stiff for government contracts in the telecom space since as many as 24 categories of telecom/network gear have been classified security-sensitive. Over 90% of such telecom gear comprises electronics. 

Back in January, the DoT had insisted on 100% domestic sourcing of 14 grades of telecom gear with security implications, but this has not been spelt out in the final PMA norms likely to be notified by the department of electronics & IT (DeitY) later this week. 

The DeitY has defined domestically manufactured electronic products or "DMEP" as items manufactured by entities registered and established in India, including special economic zones, original equipment manufacturers and their contract manufacturers, but not traders. 

Telecom sector executives claim "the Indian manufacturing units of global telecom vendors such as Ericsson, 
Alcatel-Lucent, Nokia Siemens Networks, Cisco, Huawei and ZTEamongst others should qualify as domestic manufacturers," but the PMA guidelines do not spell this out.