Govt set to protect domestic market

India, June 3 -- India is readying to protect its domestic manufacturers from Chinese products swamping the market, despite the danger of WTO rules looming large. The move, however, courts the danger of other countries dragging India to WTO terming the favours granted as unfair trade practices under the international agreement.

Three central ministries - telecom, heavy industries and renewable energy - will soon have policies to protect domestic producers from increasing penetration of foreign manufacturers, especially of cheaper equipment from China. These three sectors together contribute about one-third of annual manufacturing output in money terms.

"The Bharat Heavy Industries Limited has already manufactured equipment required to generate power in the 12th plan. but, the buyers are opting for cheaper Chinese power generation equipment and we are helpless," said a senior official of the ministry of heavy industries.

This has prompted heavy industries minister Praful Patel to urge Prime Minister Manmohan Singh this week to take policy initiatives for protecting domestic manufacturers such as incentives or mandatory sourcing of certain amount of equipment from them. The ministry also wants higher duty on power equipment imported from China.

The telecom ministry is working on guidelines for minimum procurement of 20% of equipment from domestic manufacturers in a bid to revive the sagging telecom manufacturing industry.

There is already a policy in place for public sector bodies prescribing procurement of a certain amount of equipment from domestic players. Now the ministry has firmed guidelines to extend a similar policy framework for the private sector, a move opposed by certain foreign companies. A ministries' committee has identified 18 hardware items to be mandatorily procured from domestic players. The solar energy sector is also facing flak since an estimated 60% of solar goods are from China and are low on efficiency.

Published by HT Syndication with permission from Hindustan Times.