Welcoming the government’s approval for a new public procurement policy, Industry body, the Federation of Indian Chambers of Commerce and Industry (Ficci) has said that domestic procurement is a legitimate tool under multilateral commitments and will promote value addition, drive manufacturing and create additional jobs in the country.
The Union Cabinet has approved a policy that would mandate preference to local goods and services. The policy is meant to promote the ‘Make in India’ initiative and is also aimed at stimulating flow of capital and technology. It will also provide a further thrust towards manufacture of parts, components, sub-components etc. of these items, in line with the vision of 'Make in India'.
Under the policy, preference in government procurement will be given to local suppliers. Local suppliers are those whose goods or services meet prescribed minimum thresholds (ordinarily 50%) for local content, which is essentially domestic value addition. Besides, in procurement of goods up to Rs 50 lakh, and where the Nodal Ministry determines that there is sufficient local capacity and local competition, only local suppliers will be eligible. However, for procurements valued above Rs 50 lakh, if the lowest bid is not from a non-local supplier, the lowest-cost local supplier who is within a margin of 20% of the lowest bid, will be given an opportunity to match the lowest bid.
The industry body pointed that it was the long-standing demand of Indian industry and it had been advocating for a long time for adoption of this policy to provide the requisite push to industrial growth. In 2013, its Manufacturing Agenda had explicitly asked for policies for various sectors where government procurement could be leveraged.