In order to promote self-reliance, the central government on Friday further expanded the scope for local content requirement in public procurement tenders by allowing departments and ministries to mandate higher than minimum 50% and 20% local content stipulated earlier for two separate categories of local suppliers.
“The local content requirement to categorise a supplier as Class I local supplier is minimum 50%. For Class II local supplier, the local content requirement is minimum 20%. Nodal ministry/department may prescribe only a higher percentage of minimum local content requirements to categorise a supplier ‘Class I local supplier’ or ‘Class II local supplier’. For the items, for which nodal ministry/department has not prescribed higher minimum local content notification under the Order, it shall be 50% and 20% for Class I local supplier and Class II local supplier respectively,” the Department of Promotion of Industry and Internal Trade said.
In a 4 June amendment to Public Procurement Order, 2017,DPIIT had mandated 50% for Class I and 20% for Class II local content requirement for local suppliers replacing the earlier practice of awarding a tender to the lowest price bidder in order to give more preference to local suppliers. The move comes at a time when India has been signaling decoupling of trade and investment relationship with China after a border clash in June left 20 Indian soldiers dead and an unspecified number of Chinese troops dead.
The order now also mandates that countries which do not allow Indian companies to participate in their government procurement for any item, shall not be allowed to participate in government procurement in India for all items related to that nodal Ministry or Department, except for the list of items published by the Ministry or Department permitting their participation.
“Specifying foreign certifications/ unreasonable technical specifications/ brands/ models in the bid document is restrictive and discriminatory practice against local suppliers. Foreign certification, if required, shall be stipulated only with the approval of Secretary of the Department concerned,” DPIIT said in a statement.
All administrative Ministries whose procurement exceeds Rs. 1000 Crore per annum have been asked to notify their procurement projections for the next 5 years on their respective website. “An upper threshold value of procurement beyond which foreign companies shall enter into a joint venture with an Indian company to participate in government tenders shall be notified,” the notification said.