Bharat Sanchar Nigam (BSNL) has decided to cancel the Rs 8,697-crore 4G tender it had floated in March following allegations that it had not followed the public procurement norms for giving preference to make in India products.
Bharat Sanchar Nigam (BSNL) has decided to cancel the Rs 8,697-crore 4G tender it had floated in March
following allegations that it had not followed the public procurement norms for giving preference to make in India products. The state-run company will now call all potential local suppliers, take their feedback and subsequently finalise norms like eligibility criteria, after which it will float a new tender.
As per sources, the department of telecommunications (DoT) will also form a committee that will monitor whether BSNL is following all the rules and preference is given to companies that are manufacturing telecom equipment in India.
It must be mentioned here that the government has not outrightly banned procurement from foreign firms that are importing products, but the rules are formed in such a way that they give certain price advantage to local players.
For instance, the public procurement (preference to make in India) order notified in 2017 states that if the lowest bidder in a government tender is from a local supplier, full contract will be awarded to it, but if the lowest bidder is not a local firm, only 50% of the order quantity shall be given to it.
The remaining 50% would be given to the lowest bidder among Indian firms, provided it matched the lowest tender price. It also states that margin of purchase preference shall be 20%, which means any foreign firm has to quote a price that is over 20% lower than that of an Indian firm to get the tender. There is also a clause in the rules which allow the government to restrict or exclude bidders from a country if it feels Indian suppliers are not allowed to participate in that country.
The 4G tender has been marred in controversy ever since it came out in March. The Telecom Equipment and Services Export Promotion Council (TEPC) had complained against BSNL for not following the rules after which the tender was put on hold by the government. The main concern raised by TEPC was that conditions were formed in such a manner that no Indian company could participate. One such condition was that the bidder should have a minimum turnover of Rs 8,000 crore each in the last two years (2017-18 and 2018-19 in case of financial year and 2017 and 2018 in case of calendar year).
Sources now said all such conditions will not be there in the new tender as eligibility criteria will be finalised after feedback from local players. As per sources, in the past couple of weeks, the DoT has also met several local players in order to get details about their manufacturing capacity and if they are in a position to provide the equipment to BSNL if required. Meanwhile, the domestic vendors are also contemplating to build more pressure on the government by convincing it that there is a difference between local designed and developed product than simply made in India.
Players like Nokia and Ericsson are manufacturing telecom products in India, thereby making them eligible to participate in majority of the government tenders which call for make in India norms. But even Nokia and Ericsson may be left out of any tender if they fail to meet the local content addition in the manufacturing.
Currently, these companies are making products in India with addition of around 40% local content, but government norms call for 40-65% depending on the products. The Indian players have an advantage in terms of local content as most of the components are sources locally. The major local players in the telecom space are VNL, Tejas Networks, Coral Telecom, Paramount Cables, Tirumala, etc.