Union Cabinet Approves National Procurement Policy Giving Preference to Make in India

The Union Cabinet Chaired by Prime Minister has given its approval for a national procurement policy that gives preference to ‘Make In India’ in government procurements. The policy aims to maintain the balance between promoting ‘Make in India’ and ensuring timely, quality and value-for-money products for the procuring government entities.

Need

The new policy will boost domestic manufacturing and service provision and will enhance income and employment. It will facilitate flow of capital and technology into domestic manufacturing and services. As the government procurement is always substantial it can contribute towards increasing the participation of local employees and improve their living conditions.

Salient Highlights

The national procurement policy will provide purchase preference to local content in Government procurements. Local content essentially means domestic value addition and local suppliers are those whose goods or services meet minimum thresholds (50%) for local content.
For the procurement of goods below Rs 50 lakhs, only local suppliers will be eligible if the Nodal Ministry determines that there is a availability of sufficient local capacity and local competition.
For procurements valued above Rs 50 lakhs or in case of insufficient local capacity and if the lowest bid happens to be from a non local supplier, then the lowest-cost local supplier who is within a margin of 20% of the lowest bid, will be offered an opportunity to match the lowest bid. If the order can be split into more than one supplier, the order will be split between the non-local supplier and the local supplier.
Small procurements valued below Rs 5 lakhs are exempted from the policy.
The order also covers autonomous bodies and all the government entities under the control of the government.  
The policy primarily favours self certification for verification of local content. However, if the declarations were found to be false then the supplier will have to face penal consequences.
A Standing Committee in Department of Industrial Policy and Promotion (DIPP) will oversee the implementation of this order. It will further make recommendations to Nodal Ministries and procuring entities.

Month: Current Affairs - May, 2017