Centre Unveils New Public Procurement Policy

The government, in its bid to boost local manufacturing, announced a new public procurement policy that will provide preference to `Made in India' products. “Procurement by the government is substantial in amount and can contribute towards this policy objective. Local content can be increased through partnerships, cooperation with local companies, establishing production units in India or joint ventures with Indian suppliers, increasing the participation of local employees in services and by training them,“ an official release said.

Under the policy, purchases up to Rs.5 lakh are exempted. For those between Rs.5 lakh and Rs.50 lakh, if the ministry concerned assesses that there is sufficient capacity domestically, then only local suppliers will be eligible. Any entity whose products have 50% or more domestic content will be considered a “local supplier“.

Similarly, contracts above Rs.50 lakh -or where there is inadequate supply base or competition in India -will be awarded to the lowest bidder. But if the lowest bidder is not a local supplier, the lowest cost domestic player -who is within a margin of 20% of the lowest bid -will be given the opportunity to match the bid.

If the procurement is such that the order can be divided and given to more than one supplier, the successful foreign bidder will bag half of the order, with the remaining portion going to the local supplier if it matches the lowest bid. In cases where the order cannot be divided, the lowest cost local supplier will be awarded the contract provided it matches the price bid. The policy cleared by the Cabinet said tender specifications should not be restrictive with proof of supply in other countries or exports not mandated.“They must not result in unreasonable exclusion of local suppliers who would otherwise be eligible, beyond what is essential to ensure quality or creditworthiness of the supplier,“ the statement said.

For verification of local content requirement, the government has opted for a system of self-certification with penal conditions prescribed for false declarations.In certain cases, verification by statutory or cost auditors will also be required.

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