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Business News/ News / India/ India allows higher local content requirement for public procurement

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India allows higher local content requirement for public procurement

1 min read 18 Sep 2020, 07:14 PM IST Join us

Asit Ranjan Mishra

The move comes at a time when India has been signaling decoupling of trade and investment relationship with China after a border clash
All administrative Ministries whose procurement exceeds Rs. 1000 Crore per annum have been asked to notify their procurement projections for the next 5 years

The public procurement order seeks to promote manufacturing and production of goods and services in India, to boost income and employment. (Photo: Bloomberg) (Photo: Bloomberg) — The public procurement order seeks to promote manufacturing and production of goods and services in India, to boost income and employment. (Photo: Bloomberg) **(Photo: Bloomberg)**

The central government on Friday expanded the scope for local content requirement in public procurement tenders, in a move that aims to promote self-reliance.

The move comes at a time India has been signalling decoupling of trade and investment relationship with China after a border clash in June left 20 Indian soldiers and an unspecified number of Chinese troops dead.

To achieve this, the government has allowed departments and ministries to mandate higher than the minimum of 50% and 20% local content stipulated for two separate categories of local suppliers.

“The local content requirement to categorise a supplier as Class I local supplier is minimum 50%. For Class II local supplier, the local content requirement is minimum 20%. Nodal ministry/department may prescribe only a higher percentage of minimum local content requirements to categorise a supplier ‘Class I local supplier’ or ‘Class II local supplier’. For the items, for which nodal ministry/department has not prescribed higher minimum local content notification under the order, it shall be 50% and 20% for Class I local supplier and Class II local supplier respectively," said the department of promotion of industry and internal trade (DPIIT).

The order also mandates that countries that do not allow Indian companies to participate in their government procurement for any item shall not be allowed to participate in government procurement in India for all items related to that nodal ministry or department, except for the list of items published by the ministry or department permitting their participation.

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