Union Government has modified “Public procurement norms” to promote “Make in India”

Maximum preference to be given for goods & services that have 50% or more local content

• Union Government has modified public procurement norms to give maximum preference to
  companies whose goods and services have 50 per cent or more local content
• The modifications have been done aiming at promoting ‘Make in India’ and making the country
  self-reliant
• The modification has brought three categories known as Class I, Class II and non local suppliers

Key highlights of the Modifications

          The revised Public Procurement (Preference to Make in India), Order 2017, has introduced a
concept of Class-I, II and non-local suppliers, based on which they will get preference in
government purchases of goods and services

Class – I:

• Local suppliers will get the most preference in all government purchases because their domestic
  value addition is 50 per cent or more
• Class-I local supplier means a supplier or service provider, whose goods, services or works
  offered for procurement, has local content equal to or more than 50 per cent,” according to the
  revised order
• Concept of Class-I supplier has been introduced so that in cases where local suppliers are to be
  given the order, even within that group we should give first preference to the ones whose domestic
  value addition is significantly high

Class – II

• The goods and service company whose value addition range is between 20% and 50% come
  under Class II supplier
• Only Class-I and II local suppliers “shall be eligible to bid in procurements undertaken by
  procuring entities, except when global tender enquiry has been issued
• Class I and II suppliers shall be required to indicate percentage of local content and provide selfcertification that the item offered meets the local content requirement norms

Non-local suppliers

• Companies with less than 20 per cent of domestic content in their goods or services will not able
  to participate in most of the government tenders and they are categorized as “non-local suppliers”
• The goods and Service Company that has less than 20% of domestic content in the products are
  classified as non-local suppliers
• These companies cannot participate in most of the government tenders

What is “Public procurement”?

• It is the procurement of goods, services and construction on behalf of a public authority, such as
  a government agency
• With 12 percent of global GDP in 2018, government procurement accounts for a substantial part
  of the global economy
• To prevent fraud, waste, corruption, or local protectionism, the laws of most countries regulate
  government procurement to some extent
• Laws usually require the procuring authority to issue public tenders if the value of the
  procurement exceeds a certain threshold
• Government procurement is also the subject of the Agreement on Government Procurement
  (GPA), a plurilateral international treaty under the auspices of the WTO
• Under the Public Procurement (Preference to Make in India) Order, it was envisaged that all
  central government departments, their attached or subordinate offices and autonomous bodies
  controlled by the Government of India should ensure that purchase preference will be given to
  domestic suppliers

pic courtesy : financialexpress.com