Keeping in mind PM Narendra Modi’s flagship Make in India campaign, the petroleum ministry has floated a proposal to offer 10% preference to companies sourcing local goods and services while competing for work orders in the oil and gas sector.
Petroleum minister Dharmendra Pradhan on Wednesday said that the oil companies make capital investments to the tune of R80,000-90,000 crore every year and there is a need to increase ‘local sourcing.’
Simply put, in a tender the company offering to provide more local content would get preference. If such firm is not the lowest bidder for the tender, it will be asked to match the lowest bidder. The new proposal would be applicable for all domestic and foreign service providers.
Pradhan said that the idea is to keep the competition along with creating a local ecosystem. It would pursue foreign companies to set up their manufacturing hubs here leading to job creation and revenue generation.
The proposal would be put up in the public domain for consultations till February 19. After receiving views from all stakeholders, the ministry would go-ahead in formulating a final proposal.
Pradhan said that the move would be an administrative decision of his ministry and is not likely to go for Cabinet Committee on Economic Affairs approval.
However, since oil and gas sector has several technologies which are licensed to a particular company. These kind of licensed services would be exempted from this policy. There would be a list of items and services exempted from this policy.
Currently, the defence ministry levies a defence offsets clause under which foreign companies have to source components worth 30% of the value of the order from India. Pradhan said that his ministry is open for stakeholder consultations and the details would be defined after getting views from everyone.