It has been noticed that a mega policy in underway, which will be shifting from ‘Make in India’ to ‘Buy in India’. The policy is expected to cover various economic sectors where preference to domestic procurement will be given. The sectors which are likely to be covered by this policy include those names where the government is the largest consumer, such as engineering, cement, paper and machinery.
Previously, the Government had come up with decisions for preferential domestic procurement which included sectors like petroleum and steel. But this new policy is expected to have a larger scope in terms of sectors. This move will come at a time when various countries, like the USA and Australia are under a Nationalism spree. The Government is perhaps aiming at a policy which will have a thrust on local procurement. This could also be a merit in the policy because the economic growth is slow and the government has been a major spender on infrastructure projects.
It should also be considered that any preference for domestic procurement will lead to a loss of the cost advantage of buying cheaper products from other countries. Hence, even if this policy is introduced, it could be a short term policy. Although, this policy could lead to job creation which is a priority area for the Government. Job creation has remained a constant problem for the Modi Government and various measures have been taken to increase the employment rate across the nation.
The Ministry has laid out a program for phased manufacturing to promote ‘Make in India’, which lays emphasis on local procuring. The Government has also announced initiatives for domestic sourcing and there was a policy on preference for sourcing of domestic iron and steel for infrastructure projects, which aimed at shielding the sector from the cheaper metals provided by countries such as China.
In March, the Government announced rules for public finance, which included government procurement to give first preference to locally manufactured products. In April, there was a purchase preference provided to domestic manufacturers for the purchases made by state owned oil and gas companies. Further, there was a policy announced in May, which laid preference for sourcing of domestic iron and steel for infrastructure companies.
If this policy is laid out by the Government, there will be generation of jobs and it will provide a boost to the domestic industries. It will be important to note the changes in the prices that may be impacted by the increased demand. Various companies that benefit from International purchases might object this proposition, unless the Government offers an initiative for the same. Looking at the success of ‘Make in India’, it can be expected that ‘Buy in India’ will also leave a positive impact on various sectors across the nation. By promoting domestic purchases, there will be a focus on local manufacturers and an increased job creation at the root level across the States.