May ease public procurement rules for ‘innovative’ product manufacturers, says Piyush Goyal

Goyal said that there is typically a requirement for prior experience, but the government is looking at ways to make manufacturers of new and innovative products eligible for supply through laboratory testing or other methods.

Commerce Minister Piyush Goyal, who spoke about the MOU at Center for Strategic and International Studies in Washington, said that it is a multi-dimensional partnership between the two countries. (File)

In order to boost the manufacturing ecosystem, the government is exploring ways to ease public procurement criteria for production of new and innovative products that are typically not produced domestically, Commerce and Industry Minister Piyush Goyal said on Sunday.

“In government procurement, there may be a few amendments required sectorally. There are certain sectors where the ecosystem takes time to develop. Initially, the value added is less, but gradually it increases. We are examining whether we can create a roadmap for these sectors so they can transition to become Class 1 or Class 2 suppliers,” Goyal said after meeting with production linked incentive (PLI) beneficiary companies.

The Department for Promotion of Industry and Internal Trade (DPIIT) defines a Class 1 supplier as an entity whose local content is at least 50 percent. A Class 2 supplier is one with over 20 per cent but less than 50 percent local content.

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Goyal said that there is typically a requirement for prior experience, but the government is looking at ways to make manufacturers of new and innovative products eligible for supply through laboratory testing or other methods.

“We have asked sectors to provide detailed feedback so that we can consult technical experts and see if it can be made possible to supply without prior experience,” the minister said.

Meanwhile, the Ministry of Commerce and Industry stated that actual investment of Rs 1.46 lakh crore had been realised by August 2024 under the PLI scheme, with expectations that this will exceed Rs 2 lakh crore within the next year.

“This has resulted in production or sales worth Rs 12.5 lakh crore and the creation of approximately 9.5 lakh jobs (direct and indirect), which is expected to reach 12 lakh soon. Exports have exceeded Rs 4 lakh crore, with substantial contributions from key sectors such as electronics, pharmaceuticals, and food processing,” the ministry said.

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The ministry further noted that in the electronics sector, mobile phone manufacturing now accounts for half of India’s total output, with a threefold increase in exports since FY21, and emerging sectors like drones have seen a sevenfold increase in turnover, driven by MSMEs and startups.

“The medical devices industry has witnessed technology transfers for critical equipment like CT scanners, fostering local production. Similarly, the food processing sector has contributed to sustainable agricultural practices and the production of millet and organic products,” the ministry said.

Ravi Dutta Mishra

Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More