The government is changing public procurement norms as it looks to give preference to Indian manufacturers and startups, a move that was already announced by the finance minister Nirmala Sitharaman in May.
As of now, the government is looking to pass on the benefits to companies whose goods and services have 50% or more local play. For this, the government has introduced a concept of Class-I, II and non-local suppliers in the revised Public Procurement (Preference to Make in India), Order 2017.
Based on these classes, goods manufacturers and service providers will get preference in procuring government orders. In this, Class-I local suppliers, which will have 50% or more domestic value additions are going to be the most preferred ones for all government purchases. “Class-I local supplier means a supplier or service provider, whose goods, services or works offered for procurement, has local content equal to or more than 50%,” the revised order notes.
Class-I local suppliers are followed by Class-II suppliers, which have a value-added factor ranging between 20% and 50%, followed by non-local suppliers. The order categorises all the companies that have less than 20% of domestic content as “non-local suppliers”. Such companies will not be able to participate in most of the government tenders.
The order said, “In the procurement of all goods, services or works in respect of which the nodal ministry/department has communicated that there is sufficient local capacity and local competition, only Class-I local suppliers, shall be eligible to bid irrespective of the purchase value.”
Meanwhile, the order had made it official that all the purchases of goods and services with an estimated value of less than INR 200 Cr will only be given to Class-I and Class-II companies. If a government department or an agency wants to float a global tender enquiry worth less than INR 200 Cr then it needs to get the approval of the competent authority as designated by the department of expenditure. All the companies including those in Class-I and II category of suppliers can participate in global tender enquiries.
Earlier, the classification defined local suppliers as those whose goods or services offered had a minimum local content of 50%. There was no further categorisation of local suppliers.
The government has asked the companies to indicate the percentage of their local content and provide a self-certification that the product or the service meets the prescribed criteria for local content requirements.
According to a report by the Financial Express, local content means the amount of value-added in India. This includes the total value of the item procured minus the value of imported goods or services as a proportion of the total value.
The post Govt Plans Changes In Procurement Rules To Give Preference To Indian Suppliers appeared first on Inc42 Media.
Author: Aman Rawat
Date : 2020-06-08T08:06:17.000Z