ANNOUNCEMENT 24 May 2017
As part of its Make in India campaign, the Indian Union Cabinet of ministers approved a policy to provide preference to domestic goods and services procurement in government purchases. The policy provides preference to local suppliers defined as those whose goods and services meet minimum thresholds for local content. The distinction is only on local value addition and no restriction has been placed on the ownership of the supplier between local and foreign holding.
NUMBER OF INTERVENTIONS
Official press release
"Cabinet approves policy for providing preference to 'Make in India' in Government procurements"
The policy for purchase preference for local content in government purchases gives preference to local suppliers that meet the minimum thresholds for local content in their goods and services. The policy applies to all government procurements including ones by autonomous bodies, companies and entities under the government's control.
The policy differentiates implementation restrictions on the basis of the quantum of the contract, as below -
The same government announcement included the following provision. For government procurement of INR 5 million and more or where sufficient local capacity and competition doesn't exist, if the lowest bid is from a non-local supplier and if there is a bid from a local supplier that is within a margin of 20% from the lowest the bid, then the local supplier will be given an opportunity to match the lowest bid. Further, in case the local supplier matches the lowest bid, it will get to supply a) 100% of the procurement if the procurement is non-divisible or b) 50% of the procurement if the procurement is divisible, where the contract of the rest 50% will be given to the non-local supplier.
The minimum local content under the procurement policy has been set at 50%, unless otherwise specifically prescribed by the nodal ministry, and shall be calculated as the amount of value added i.e. total value of the item procured (excluding net domestic indirect taxes) minus the value of imported content in the item (excluding import duties) as a proportion of the total value, in percentage.