Thrust on ‘local’: No global tender for up to Rs 200-crore govt purchase

By: |
Published: June 19, 2020 3:01 AM

In a notification, the Department for Promotion of Industry and Internal Trade (DPIIT) has said only suppliers with local value addition of a minimum of 20% will be allowed to bid.

Therefore, global tenders will be disallowed in government procurement of up to Rs 200 crore. Therefore, global tenders will be disallowed in government procurement of up to Rs 200 crore.

The government has notified that no global tender will be floated for official procurement of up to Rs 200 crore, in sync with its announcements last month under the Atmanirbhar package, to ensure that local businesses, especially small and medium ones, don’t face unfair competition from large foreign companies with deep pockets. Earlier, no global tenders were floated for purchases of up to Rs 50 lakh.

In a notification, the Department for Promotion of Industry and Internal Trade (DPIIT) has said only suppliers with local value addition of a minimum of 20% will be allowed to bid. Class-I local suppliers (those that ensure value addition in excess of 50%) will get preference.

In most cases, if the lowest bidder is a Class-I supplier, he will get the contract. However, if the lowest bidder is a Class-II supplier with local value addition of between 20% and less than 50%, the contract will go to the lowest Class-I bidder.

Global tenders can be floated for procurement of up to Rs 200 crore only under exceptional circumstances, that, too, with the approval of the finance ministry’s expenditure department, the notification said. An official source said this will be done only when there is hardly any supplier in a particular goods or services category.

“For the purpose of this order, work includes engineering, procurement and construction (EPC) contracts, and services include system integration contracts,” it said.

Announcing the relief package last month, finance minister Nirmala Sitharaman announced: “Indian MSMEs and other companies have often faced unfair competition from foreign countries. Therefore, global tenders will be disallowed in government procurement of up to Rs 200 crore. The necessary amendments of General Financial Rules will also be done.”

This will be a step towards self-reliant India and will also support the ‘Make in India’ initiative, she said.

The government has reserved 25% for the MSME sector in all its purchases, including through the Government e-Marketplace portal.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Shivraj Chouhan seeks GI tag for Madhya Pradesh’s Basmati rice; meets Union agriculture minister
2Current economic scenario in India as well as global markets is challenging: Chandrasekaran
3Govt not considering merger of CBDT, CBIC: FinMin