What is a local content requirement?

A local content requirement is a policy that mandates a certain percentage of a product must be produced locally. This means that for a product to be considered compliant with this requirement, a specific fraction of its components, assembly, or manufacturing must occur within the local economy. This policy is often implemented by governments to promote domestic industries, create jobs, and stimulate local economic growth.

By ensuring that a portion of production occurs within the country, local content requirements support local suppliers and industries while helping to increase the national economic footprint. These requirements can also help enhance the skills of the local workforce and foster innovation in local production techniques. The emphasis on a percentage illustrates the flexibility that allows for some level of foreign input, which can incentivize international companies to invest in the local economy while still protecting domestic interests.