IT industry moans about Indian government's procurement rules

The Indian government’s new procurement rules are threatening to kill off the booming local IT industry.

Global technology and business groups have written a stiff letter to Prime Minister Manmohan Singh complaining that the government’s daft rules on government-purchased technology could have spillover effects on the country’s broader economy

They point out that India’s stance is at odds with the nation’s World Trade Organization (WTO) obligations.

The rules given would tip the scales towards domestically manufactured electronic goods for government purchase. This is against any WTO agreements.

The letter said that India exemplified the benefits of competition and regulatory reform as demonstrated by the tremendous growth in the telecommunications and IT services sector over the past fifteen years.

Indian needs to remain on this path because its economic growth and “ability to continue to be competitive in the global ICT sector depend on it,” the letter said.

If other governments see India doing this, they might enact sanctions of their own. A US government department might be banned from using Indian outsourcers, for example.

The letter was sent by the Information Technology Industry Council (ITI), Telecommunications Industry Association (TIA), U.S.-India Business Council (USIBC), and 32 other associations from the United States, Europe, Japan, Canada, Australia, Hong Kong, and Korea.

The groups urge India to rescind the PMA and initiate a consultation process with the private sector and other stakeholders to develop policy approaches that will promote ICT sector growth without creating market-distorting policies.