Local Content Requirement

According to a recent media report, the government is planning to tweak its procurement policy to give a fillip to domestic manufacturing.

  • The industry department has floated a proposal to raise the minimum local content requirement for public procurement for Class-I and -II suppliers from 50 per cent currently to 70 per cent, and 20 per cent as of now to 50 per cent, respectively.
  • However, it has suggested exempting defence production, electronics and information technology, telecommunications, mines, railways, power, ports, and shipping & waterways from the enhanced limits.
  • Local content requirements are a type of trade protection mechanism that depends on the law to create requirements for international companies and forces them to produce or rent a certain amount of goods and services domestically.
  • In India’s context the term local content requirement is used in public procurement tenders.

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