To boost manufacturing post-COVID-19 lockdown, Centre asks PSUs, govt departments to buy locally-made goods

A recent government note outlines a mechanism to ensure that the indigenous manufacturing sector's products are purchased locally.

Yatish Yadav May 11, 2020 20:14:56 IST
To boost manufacturing post-COVID-19 lockdown, Centre asks PSUs, govt departments to buy locally-made goods

As the country gears up to resume manufacturing after the Coronavirus lockdown, the Centre is ramping up new strategies to enable an uninterrupted supply chain and an organised procurement market. Firstpost has reviewed a government note which outlines a mechanism to ensure that the indigenous manufacturing sector's products are purchased locally and conditions are eased for export to countries devastated by the COVID-19 pandemic.

As the first step of this, every government department has been asked to create a purchase plan for the next three years. The purchase plan will include all the high-value goods required by government departments, public sector units and other wings of ministries. This list is to be shared with the domestic manufacturers.

To boost manufacturing postCOVID19 lockdown Centre asks PSUs govt departments to buy locallymade goods

Representational image. Reuters

Secondly, domestic manufacturers will be provided with the purchase plans of at least 30 of the largest public sector units, so they can align the production accordingly. The Department of Expenditure has suggested that rules can be tweaked to allow single bids while controlling the tender pricing and benchmarking of the product’s purchase value.

“Stakeholder meetings may be held by the ministries and central departments to inform domestic manufacturers of 3 years' high value and a common goods procurement plan. Department of Revenue to proactively identify cases of inverted duty structures creating disadvantage to manufacturing in India and take steps to rectify them. Concerned ministries may identify cases of inverted duty structure which may be discouraging domestic manufacturing and ensure rectification with Department of Commerce and Department of Revenue,” the note said.

The Ministry of Electronics and Information Technology recently tweaked the rules allowing purchase entities to procure mobile phones only from local suppliers, irrespective of purchase value, provided that local suppliers meet the criteria of 50 percent local content in the finished product. Earlier, local suppliers were eligible for bidding if the value of procurement was less than Rs.50 lakh.

Similarly, the Indian Railways, which purchases goods worth more than Rs.70,000 crore annually, is formulating a plan for the next three years to transact with Indian firms and foreign manufacturers planning to shift units from China to India. All the Railway Zones and production units have been advised to modify their purchase processes to encourage domestic manufacturing.

The Ministry of Defence, on its part, has revised the procurement guidelines for 15 product categories to encourage domestic manufacturers. The Department of Defence Production is implementing these rules in coordination with stakeholders.

Several states are already amending labour laws to restart production in factories that were shut down due to the coronavirus outbreak. A key challenge will now be to ensure the safety of labourers. To this end, the National Disaster Management Authority (NDMA) on Saturday issued a set of guidelines to restart industrial production with adequate precautions to avoid incidents like the Vizag gas leak. Small-scale industries will also have to ensure proper testing and isolation facilities.

Meanwhile, the Cabinet secretariat is likely to conduct a meeting next week to review the measures in consultation with NITI Aayog and top bureaucrats of the government departments. A review of foreign manufacturers planning to shift to India will also be taken up. According to sources, officials from the Department of Commerce, along with certain state governments, will soon have a series of video meetings focusing on electronics, medical devices and food processing with Japanese companies planning to relocate to India. After 20 May, such meetings will also be conducted with Australian, Canadian, Danish and French manufacturing companies.

Updated Date:

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