Lifts to computers: 4 of 10 govt tenders can’t comply with Make in India rules

Context: Rules framed under the Public Procurement (preference to make in India)
Order prohibit tenders that restrict or discriminate against domestic suppliers
either by specifying foreign brands or setting eligibility conditions around
turnover or production capability that may put domestic firms at a disadvantage.
However, over the last three years, an estimated 40% of over 3,500 high-value
tenders, which accounts for 64,000 crores were flagged as “non-compliant” with
these rules by the Department of Industry and Internal Trade (DPIIT), which is
the nodal agency for ‘Make in India’ push.

Key points

·       Overview: The DPIIT’s
analysis, presented to a Committee of Secretaries (CoS), showed that when these
violations were flagged to procuring entities and respective ministries,
corrective action was taken in 180 tenders and no response was received in 706
cases.

·       Make
in India: Make in India is a
Government of India scheme launched by Prime Minister Narendra Modi in 2014
intended to boost the domestic manufacturing sector and augment investment into
the country.

Objectives - Raise in manufacturing sector growth to 12-14% per year. Creating
required skill sets among the urban poor and the rural migrants to foster
inclusive growth. A rise in the domestic value addition and technological depth
in the manufacturing sector.

·       Pillars
of ‘Make in India’: New Processes - Recognized 'ease of doing
business' as vital for entrepreneurship, implementing measures to improve the
business environment for startups and established enterprises.

New
Infrastructure - The government prioritised developing industrial corridors and smart
cities to create world-class infrastructure.

New Sectors - Foreign Direct
Investment (FDI) was significantly opened in various sectors including Defence
Production, Insurance, Medical Devices, Construction, and Railway
infrastructure.

New Mindset - The government
embraced a role as a facilitator rather than a regulator, partnering with
industry to drive the country’s economic development. 

·       Make
in India 2.0: The ongoing "Make in India 2.0" phase,
encompassing 27 sectors, continues to propel the program forward, consolidating
India’s role as a significant player in the global manufacturing arena.

·       Challenges: Global
Manufacturing Index - As of 2023, India ranked 5th in the Global
Manufacturing Index, trailing behind countries like China and the USA,
indicating the need for enhanced competitiveness.

Manufacturing
Contribution to GDP - The manufacturing sector contributed approximately
17% to India's GDP in FY 2022-23, highlighting the necessity for policies that
stimulate growth in this area.

Skill
Development Deficiencies - The India Skills Report 2024, indicate that around
60% of the workforce in India lacks relevant skills for manufacturing jobs,
which hampers the potential growth of the sector.

Innovation and
R&D - India's research and development (R&D) expenditure-GDP ratio of 0.7%
is very low when compared to major economies and is much below the world
average of 1.8%.

·       Way
Forward: Streamlining Regulations - Simplify bureaucratic processes and
labour laws to create a more business-friendly environment.

Investment in
Infrastructure - Upgrade transportation networks and logistics systems to improve
manufacturing efficiency.

Skill
Development Programs - Implement targeted skill development initiatives to
address workforce skill gaps.

Incentivizing
R&D Investment - Promote innovation through increased investment in
research and development, including tax incentives.

Monitoring and
Evaluation - Establish a framework for monitoring the initiative's impact to identify
bottlenecks and areas for improvement.