ANNOUNCEMENT 31 Dec 2020

India has amended the policy providing a preference for domestically manufactured iron and steel goods in government procurements.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 31 Dec 2020 | Removal date: open ended

Public procurement localisation

On 31 December 2020, the Ministry of Steel through a notification in the gazette amended the "Policy for Providing Preference to Domestically Manufactured Iron & Steel Products in Government Procurement - revised, 2019". The policy, originally announced in 2017 and then updated in 2019, requires the procurement of domestically manufactured iron and steel in certain government projects. Further, the policy also specifies the minimum local content required for a product to be classified as "domestically manufactured." With the current amendment, the following changes have been introduced - 

  • It has been clarified that the policy will be applicable not only to all ministries or departments of the government and their entities but also to all Central Sector Schemes(CS) or Centrally Sponsored Scheme (CSS) for which procurement is done by states or local bodies (in case the project is partly or fully funded the Government of India)
  • The definition of domestic value addition has been amended from "(Net Selling Price minus landed cost of imported input materials) as a proportion of the net selling price" to "(Total value of the item to be procured/sold minus the value of imported content in the item) as a proportion of the total value of the item"
  • Procurement of domestically manufactured goods listed under this policy will be required when the procurement value in a government project is greater than INR 500,000 (~ USD 6834*) or when the annual procurement of any government organization is greater than INR 500,000. The minimum procurement required to trigger the policy was INR 25 crore (~ USD 3.58 million) earlier.
  • The minimum domestic value addition required for certain goods to be classified as domestically manufactured has been increased from 15% to 20%
  • No Global Tender Enquiries (GTE) will be invited for the procurement of iron and steel products covered under the policy
  • No Global Tender Enquiries (GTE) will be invited for procurements of Capital Goods for the manufacturing of iron and steel products if the estimated value of procurement is up to INR 200 crore (~ USD 27.34 million)
  • The Ministry of Steel may restrict or exclude bidders of certain countries in its procurements if the Ministry believes that those countries have restricted Indian suppliers of iron and steel products to participate or compete in the procurement by those countries.

The new requirements apply as of 31 December 2020. 

* INR to USD as on 31 December 2020 - INR 73.16/USD