It takes guts to question protectionism, but I guess it’s not that difficult when you are in the Prime Minister’s Office:
The Prime Minister’s Office is worried about the IT and Communication Ministry’s policy of encouraging domestic manufacturing.
The PMO has sent the Ministry a note asking for comments on how the policy aims to link manufacturing requirements to national security.
“Efforts to link manufacturing with security is questionable. It will lead to distortions in the market. Security objectives can be met through audits, tests and need to be handled separately,” states the note sent by the PMO.
The Communications Ministry has proposed a policy that makes it mandatory for companies, government institutions and telecom players to buy at least 30 per cent of their electronics and hardware requirements from manufacturing facilities in India.
The policy also stipulates that manufacturers must ensure that value addition happens locally.
The PMO’s note assumes significance in the light of the protests by the US Trade Representatives and the European Commission on grounds that the policy goes against WTO agreements.