Indigenisation drive: Cabinet opens up $600 billion market for domestic manufacturing firms #Hindustan360

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Cabinet approved a major push towards the government’s indigenisation drive, opening up a potentially $600 billion-plus market for Indian manufacturing and services companies. View more at #Hindustan360.

The policy, which makes it mandatory to give first preference to domestic suppliers in all government purchases worth over Rs 5 lakh, also covers autonomous bodies and state-run companies and other entities.

This is in line with the government’s ‘Make in India’ vision of promoting domestic production of goods and services to enhance local income and employment, it said in a news release. The policy won’t apply to purchases worth less than Rs 5 lakh. Beyond that, for procurement up to Rs 50 lakh, and where the nodal ministry determines that there is sufficient local capacity and competition, only Indian suppliers will be eligible to participate in the bid.

More bids for local suppliers

For procurements worth over Rs 50 lakh where there may not be enough local competition, special provisions will be built into favour the lowest-cost local supplier. When the lowest bid isn’t from an Indian supplier, the local supplier will be given the opportunity to match the lowest bid provided his original offer is within 20% of the lowest bid. If the procurement is of a type of product where the order can be divided and given to more than one supplier, the non-local supplier who is the lowes bidder will get half the order and the local supplier will get the other half, if it agrees to match the price.

Local suppliers will be defined as those whose goods or services meet the prescribed minimum thresholds — usually 50% — for local content. Local content is essentially domestic value addition.

The policy requires that specifications in tenders must not be restrictive — there should not be a requirement for producing proof of supply in other countries or proof of exports in respect of previous experience. They must also not result in unreasonable exclusion of local suppliers who would otherwise be eligible beyond what is essential for ensuring quality or credit-worthiness of the supplier.

View more at #Hindustan360.