Govt Considers Amending Procurement Policy To Prioritise Local Manufacturing


(MENAFN- KNN India) New Delhi, May 13 (KNN) The Indian government is mulling over changes to its public procurement policies aimed at boosting domestic manufacturing and production under the Make in India initiative.

According to a senior government official, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed raising the minimum local content requirements for suppliers bidding on government contracts, reporter BS.

Under the current Public Procurement Order, suppliers are classified into three categories based on their local content value addition. Class I, where at least 50 per cent of the content is locally procured, Class II, with 20-50 per cent locally content procured, and non-local suppliers with less than 20 per cent local content.

The new proposal seeks to increase the local content threshold for Class I suppliers from 50 per cent to 70 per cent, while hiking it for Class II from 20 per cent to 50 per cent.

However, certain key sectors like defence, electronics, telecommunications, mining, railways, power, ports and shipping have been recommended for exemption from the enhanced local content limits by the DPIIT.

The inter-ministerial consultations are ongoing, with the proposal requiring the Cabinet's approval eventually. A senior official indicated it is likely to be taken up by the next government.

PK Singh, CEO, Government e-Marketplace (GeM), welcomed the move, stating it would be implemented once notified officially. Ajay Dua, former industry secretary, backed gradually increasing the local content thresholds to promote domestic industries and manufacturing's contribution to GDP.

While potentially benefiting Make in India, the proposed policy tweak could face resistance from sectors advocating cheaper imports and those seeking a level playing field in public tenders against domestic suppliers with greater overheads.

(KNN Bureau)

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