Fiscal stimulus 2.0: No global firms in govt tenders below Rs 200 crore

Topics Coronavirus | MSME sector | Lockdown

Under the existing guidelines for purchase amended in May 2019, government agencies were required to procure goods and services less than Rs 50 lakh from local suppliers.
The Union government will not buy goods or services valued less than Rs 200 crore from foreign suppliers.

For this purpose, the general financial rules (GFR) will be amended to disallow global tender enquiries.

The attempt is to protect micro, small and medium enterprises (MSMEs) from the downturn and create assured demand for their goods and services.

Under the existing guidelines for purchase, amended in May 2019, government agencies were required to procure goods and services worth less than Rs 50 lakh from local suppliers. The government departments were given free hand to raise the upper limit. Exemptions could be made only if the quality or specification was not available with the local supplier.

The National Democratic Alliance government had, in fact, put in place a public procurement (preference to Make In India) order to promote Indian industry.

Under the purchase preference policy, if the lowest or the best bid in a government tender was from a non-Indian company, only half of the contract value was awarded to it.

The lowest bidder among Indian companies would get the remaining 50 per cent of the tender, provided it matched the lowest tender price.

The Union government also runs a portal called Government e-Marketplace (GeM), which allows MSMEs, especially from Scheduled Castes/Scheduled Tribes (SC/ST), to sell their products.

This enables government departments to meet the mandatory procurement goal of 25 per cent from MSMEs and a sub-target procurement of 4 per cent goods and services from MSME entrepreneurs within SC/ ST communities.

According to the GeM website, nearly 319,000 sellers have registered on it. Orders worth Rs 38,905 crore in gross merchandise value —  of which approximately 68,286 are MSME sellers worth Rs 20,263 crore — have been facilitated via GeM.

The GFR were fixed way back in 1963, but later amended in 2005 and 2017 by the expenditure department of the Ministry of Finance.

The rules allow the Union government to provide through notification mandatory procurement of any goods or services from any category of bidders, or provide for preference to bidders on grounds of promotion of locally manufactured goods or locally provided services.

This is generally done to enhance income and employment. After the Department of Expenditure brought in the amended GFR in April 2017, the Ministry of Commerce and Industry notified the public procurement (preference to Make In India) order subsequently on June 15, 2017. The Department of Expenditure also issued a revised manual on the procurement of goods and consultancy and other services.

State governments generally follow the Union government guidelines, but are free to set their own rules.

The government decision to go for local products and services is part of Prime Minister Narendra Modi’s Self-Reliant India Campaign. In his address to the nation on Tuesday, he had asked citizens to go in for local products.


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