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Why India’s PMA Will Harm the Indian and Global Economies

March 17, 2014
| Reports

Despite contentions that India’s Preferential Market Access (PMA) policy—which enacts local content requirements in public procurement of electronics and information and communications technology (ICT) products in India—is a temporary, limited, and non-distortionary measure designed to give a slight and momentary boost to domestic electronics and ICT hardware manufacturers, the reality is that the PMA is a highly distortive policy which threatens to damage both on India’s and the broader global economy. India’s PMA:

 1. Is trade-distortionary, entailing at least a de facto price and/or quality preference which will have significant negative effects on Indian citizens;

2. Far from making ICT products in India more secure, is actually likely to make them less secure; 

3. Will damage global trade and contribute to spillover and contagion effects reducing global trade and economic integration;

4. Is distinct and more severe than many other countries’ preferences for domestic production in government procurement activity;

5. Is unlikely to have any significant long-term effectiveness as an instrument to bolster domestic manufacturing, while in fact distracting Indian policymakers from enacting the kinds of policies they really should b