India has announced a preference for local procurement of certain goods related to the power sector.




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Measures for contributing towards "Aatmanirbhar Bharat" and "Make in India" through phased indigenisation in Power Sector

Public Preference (Preference to Make in India) to provide for Purchase Preference (linked with local content) in respect of Power Sector

Inception date: 23 Jul 2020 | Removal date: open ended

Public procurement localisation

On 23 July 2020, the Ministry of Power further through an Order titled "Measures for contributing towards "Aatmanirbhar Bharat" and "Make in India" through phased indigenization in Power Sector" set public procurement localisation rules related to power projects. Concretely, the notification established that all equipment, materials, parts, and items that are required in the power sector and which are domestically manufactured with sufficient domestic capacity shall necessarily be procured from the domestic manufacturers. For products where domestic capacity is unavailable, the Ministry of Power will prepare an action plan for the indigenisation of these products over 2 to 3 years.

Further, the Ministry of Power will also prepare an "Approved List of Models and Manufacturers (ALMM)" for the power sector. All power projects shall be required to procure equipment from the manufacturers mentioned in this list. 

These restrictions are in addition to the ones announced on these goods on 2 July 2020 (See related State Act).

On 28 July 2020, in line with the above Order, the Ministry notified a list of goods and components for the transmission sector (of 66 kV and above), hydro sector, and the thermal sector stating there is sufficient local capacity for these goods, and orders for government procurement must be placed only from Class-I local suppliers. This is regardless of the procurement value, provided that the Minimum Local Content (MLC) requirements have been met. Class-I suppliers are those that have a local content of at least 50% of the manufactured good.

This announcement was made under the Public Procurement (Preference to Make in India) Order 2017. The policy requires that for government procurements with an estimated value of less than INR 5 million, and for sectors where there is sufficient local supply and competition, only local suppliers will be eligible for state contracts. But for values above INR 5 million, or where there isn't sufficient local supply, both local and non-local suppliers will be eligible (see related State Act). By notifying that there is sufficient local capacity for these products, future public procurement of these goods will only be done through local i.e. Class-I suppliers.





Inception date: 23 Jul 2020 | Removal date: open ended

Localisation incentive

On 23 July 2020, the Ministry of Power further notified through an Order the Rural Electrification Corporation (REC) and the Power Finance Corporation (PFC) will provide financing for power projects at subsidized rates of interest to developers who use domestically manufactured equipment for these projects.

The REC and the PFC are Indian Public Sector Undertakings (PSUs) primarily financing electrification projects in India.