In a bid to boost its flagship ‘Make In India’ programme, the Narendra Modi government has approved a new policy that will encourage consumers to Buy in India.
Titled “Government procurement preference to Make In India order, 2017”, under the policy, “preference in government procurement will be given to local suppliers,” an official statement said.
“It will also stimulate the flow of capital and technology into domestic manufacturing and services… (and) provide a further thrust towards the manufacture of parts, components, sub-components etc. of these items, in line with the vision of ‘Make in India’,” the statement further added.
The new policy which is an Indian version of the US Buy American policy will give preference to locally made goods and services. The national procurement policy involves purchases of at least Rs 2 trillion a year and also covers autonomous bodies, government companies and entities under the government’s control.
Local suppliers are those whose goods or services meet prescribed minimum thresholds (ordinarily 50 percent) for local content, which is essentially domestic value addition.
The local content, it said, can be increased through partnerships, cooperation with local companies, establishing production units in India or joint ventures with Indian suppliers, increasing the participation of local employees in services and by training them.
Small purchases of less than five lakh rupees are exempt from the policy; procurement of goods and services worth Rs 50 lakh or less, where the nodal ministry determines that there is sufficient local capacity and local competition, can be made only from local suppliers. In the case that there is insufficient local capacity or competition, local suppliers will be given a 20 percent margin of purchase preference and will be given the opportunity to match the lowest bid within a margin of 20 percent of the same.
“If the procurement is of a type that the order can be divided and given to more than one supplier, the non-local supplier who is the lowest bidder will get half of the order and the local supplier will get the other half if it agrees to match the price of the lowest bid. If the procurement cannot be divided, then the lowest cost local supplier will be given the order if it agrees to match the lowest bid,” cabinet statement said.
Notably, there will be a procedure for verification of local content relying primarily on self- certification. A standing committee of the Department of Industrial Policy and Promotion (DIPP) will oversee the implementation of this order and other issues and make recommendations to nodal ministries and procuring entities.