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

3

  • 3 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Official press release
"Cabinet approves policy for providing preference to 'Make in India' in Government procurements"

http://pib.nic.in/newsite/PrintRelease.aspx?relid=162107

Inception date: 24 May 2017 | Removal date: open ended
Still in force

Public procurement access

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 -

  • For government procurement of INR 5 million or less in areas where it is determined by the concerned ministry that there is sufficient local capacity and competition, only local suppliers will be eligible to supply.
  • For government procurement of INR 5 million and more or where sufficient local capacity and compeition 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.
  • Government procurement of less than INR 0.5 million has been exempted from the order.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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Inception date: 24 May 2017 | Removal date: open ended
Still in force

Public procurement preference margin

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.

 
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Inception date: 24 Apr 2017 | Removal date: open ended
Still in force

Local sourcing

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.

 
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