Indian manufacturers of desktop PCs and dot matrix printers get preferential market access

The notification comes into effect immediately, and the “first year” mentioned in the notification would be upto March 31, 2014

In an effort to boost indigenous manufacturing of desktop PCs and dot matrix printers, and keeping in view the security concerns of the country, the Union government has approved the Preferential Market Access (PMA) policy. This supports domestic manufacturers and gives preference to locally made desktop PCs and dot matrix printers.

This is the second phase of bringing more products under the PMA policy. In the first phase, the policy covered indigenously manufactured telecom products.

On December 17, 2012, the government notified all ministries (except defence), departments and their agencies to give preference to domestically manufactured desktop PCs and dot matrix printers while procuring these products for their use, and not for commercial resale.
The notification comes into effect immediately, and the “first year” mentioned in the notification would be up to March 31, 2014.

Objective of the policy

The direct objective of this policy is to give a fillip to the domestic manufacturing industry, and to put an end to the dependence on MNCs.

OEMs that want to participate in Indian government projects will now be forced to set up manufacturing units in India. This will not only increase electronics manufacturing in India but also improve job prospects for engineers, besides others.

The policy also aims to compel OEMs to do value addition to the products imported as, currently, most companies only assemble parts. Now, value addition is mandatory in the manufacture of different components, and manufacturers will also need to prove that they have added value as per the policy.

Products that qualify under the policy
For a desktop PC to get preference during government procurement, it should comprise a CPU, memory, hard disk drive, keyboard, mouse and a separate or integrated display unit. It should also be able to operate independently.

Similarly, a dot matrix printer (which is an impact printer that forms dots on paper with a metal pin and is driven by an electromagnet, based on the solenoid principle) will qualify to get preference in government procurement if it is able to produce a character matrix by the horizontal and vertical resolution of the dot matrix printhead.

What a manufacturer needs to do

From now onwards, any ministry, government department or agency would require to purchase 50 per cent of their desktop PCs and dot matrix printers from domestic manufacturers. On the other hand, manufacturers of desktop PCs will be qualified to sell their products under this policy only if they do 30 per cent value addition (in one year) in terms of the bills of material (BOM) required for desktop PCs. Similarly, manufacturers of dot matrix printers will have to do 40 per cent value addition (in one year) in terms of BOM required for dot matrix printers. The domestic value addition from the second year onwards will automatically increase by 5 per cent.

The implementation of this notification will be based on the certification provided by manufacturers, with respect to value addition as per the policy.

Criteria for BOM
The domestic BOM of a desktop PC would be the sum of the cost of the main inputs like the processor, memory, hard disk drive, LCD monitor, DVD drive, cabinet and SMPS, keyboard and mouse, motherboard and bare PCB. These inputs should individually satisfy the value-addition requirements. For example, for the processor, domestic ATMP or fabrication (or both) are required. For the memory, domestic assembling of imported memory chips on imported/indigenously manufactured bare PCB/domestic ATMP/fabrication or a combination are required. Likewise, there are criteria for each of the inputs (see Table 1).

In dot matrix printers as well, value addition is required for any input to be classified as domestic BOM. For example, the main PCB should be domestically assembled, and the domestically manufactured parts and components that are used in the assembly of the main PCB should have at least 10 per cent value addition in the second year, which should go up to a minimum of 15 per cent in the third year. Likewise, there are criteria for each of the other inputs like bare PCBs, SMPS, carriage motors and paper feed motors, front control panel, home position/paper end sensors, main printer cabinets and other small plastic components, printer mechanism assemblies, print heads and interconnecting cables, etc (see Table 2).

By Srabani Sen