The government is considering relaxation in public procurement norms for companies availing themselves of production linked incentives (PLI) for various sectors, to boost market opportunities for them. Commerce and industry minister proposed a special carve-out for PLI companies when the government invites bids for supply of assorted goods and services for its consumption, including putting quality approvals of their products on the fast track. In addition, the conditions of prior experience and indigenisation for the tag of Class I and II suppliers to the government under the public procurement policy may be relaxed for firms making investments under the PLI schemes.
Goyal said after an interaction with CEOs of 140 PLI beneficiary companies here on Sunday: “It (special public procurement regime for PLI firms) was a good suggestion and I have asked officials to examine it. We will examine whether we can have a road map for these sectors (to enable them) to transition into Class 1 and Class II suppliers (sooner),” Goyal said.
Class I supplier is one whose goods, services or works offered for procurement has local content of 50% or more. Class II supplier is the one with the local content between 20% and 50%.
“In government procurement there might be few amendments required on a sectoral basis, rather than an overhaul. There are certain sectors in which the ecosystem takes time to develop. Initially the domestic value added is less and gradually it goes up,” the minister said.
The minister added that it may not be reasonable to ask for prior experience in supplies to government, when a company is manufacturing its product for the first time in India, indicating that this condition could be done away with for firms under the PLI cover. “I have asked such sectors to write to us with details so that we can take some technical advice,” he said. Many of the PLI companies are making items whose local production was non-existent, he noted.
In recent years, procurement of services through Government e-Marketplace (GeM) has grown significantly, and were over Rs 1.9 lakh crore in FY24, up 170% from the previous year. Goods procured via the portal are of comparable order too.
Meanwhile, investment by companies participating in the PLIs have touched Rs 1.46 lakh crore till August and is seen to surpass Rs 2 lakkh crore in the next couple of years. “These investments have resulted in production and sales worth Rs 12.5 lakh crore and generated direct and indirect employment of around 0.95 million, and expected to reach 1.2 million soon,” Goyal said.
The PLI companies have also generated exports of over Rs 4 lakh crore, with substantial contributions from key sectors such as electronics, pharmaceuticals and food processing. Investment flowing into the semiconductor industry, which are upwards of Rs 2 lakh crore, are additional. “The PLI is just half way through,” the minister said.
The incentive schemes are expected to catalyse investments of Rs 3-4 lakh crore by 2028, the end date. The scheme was introduced in 2020, and 14 sectors are now covered with outlay for incentives of Rs 1.97 lakh crore.
From: financialexpress
Financial News
