IEEMA Hails Modi Govt Move to Amend Public Procurement Rules to Restrict Chinese Imports

On July 23, the government announced an amendment to the rules imposing curbs on procurement for public projects on the grounds of matters directly or indirectly related to ?national security?. This will mostly affect entities based in China.

In a release issued on Friday, IEEMA has welcomed the move and assured of full support on behalf of its membership to meet the requirements of the country.

India shares a land border with seven countries, including China, Pakistan, Bhutan, Myanmar, Afghanistan, Nepal and Bangladesh. As per the order, issued by the Department of Expenditure under the Ministry of Finance, any bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services ? including consultancy services and non-consultancy services ? or works such as turnkey projects only if they are registered with the competent authority. The registration committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT) will be performing this role. Political and security clearance from the ministries of external and home affairs, respectively, will be mandatory.

The order takes into its ambit public sector banks and financial institutions, autonomous bodies, central public sector enterprises (CPSEs) and public-private partnership projects receiving financial support from the government or its undertakings.

The Govt of India has also written to the chief secretaries of states invoking the provisions of Article 257(1) of the Constitution of India for the implementation of this order in procurement by them. For procurement by state governments, the competent authority will be constituted by the states but political and security clearance will be mandatory.

With Prime Minister Narendra Modi's Atma Nirbhar Bharat call, the government is also cutting dependence on China to encourage manufacturing in the country.

?Make in India? to Benefit Enormously from Move
RK Chugh, President, IEEMA said, ?Indian electrical equipment industry has the capacity, ability and cost competitiveness to effectively service and meet the needs of not only the Indian industry but also enhance its exports. And if we as a nation are to be serious about taking on China in our home market, then all of us ? manufacturers, importers, retailers, consumers and the government ? need to commit to this. And more importantly, be prepared for both the consequences and costs of such a move at least in the short run. From medium term onwards, we will start seeing enormous benefits out of full Make in India efforts.?

Vipul Ray, Senior Vice President, IEEMA articulated, ?National security is of paramount importance and in today?s connected world we as a nation have to be very vigilant and careful in what in install into our systems. The electricals industry is even more vulnerable considering the nature of the technology and the widespread ramifications that it can have if something goes wrong as it has the potential to disrupt every aspect of life, whether it be hospitals, telecommunications or industrial production.?

Rohit Pathak, Vice President, IEEMA opined, ?This is a turning point for the Indian electrical equipment industry. We have the capability and are competitive versus the Chinese players in the global market. However, with predatory pricing, the Chinese had been partially successful at weakening the Indian players in our home market strategically over the past decade while simultaneously blocking Indian exports into China. I believe that with this move, the Indian electrical industry will benefit significantly in the medium term by gaining the scale in the domestic market and leveraging it to further enhance our global competitiveness.?

Relaxation has been provided in certain limited cases, including for the procurement of medical supplies for containment of COVID-19 global pandemic till December 31, 2020. By separate order, countries like Bhutan, Nepal and Myanmar to which Govt of India extends lines of credit or provides development assistance have been exempted from the requirement of prior registration.

The new provisions will apply to all new tenders. In respect of tenders already invited, if the first stage of evaluation of qualifications has not been completed, bidders who are not registered under the new order will be treated as not qualified. If this stage has been crossed, ordinarily the tenders will be cancelled and the process started anew. The order will also apply to other forms of public procurement. It does not apply to procurement by the private sector.