Central Govt May Ask States To Give Preferential Treatment To Local Suppliers

In a bid to boost local products, the central government may direct states to amend their procurement contracts. Under the amendment, states should ensure that local suppliers get preference over Chinese companies or goods.

Earlier this month, the Centre had decided to give preferential treatment to local suppliers and locally manufactured goods. Under this, tech startups offering products and services to the government will have more chances to bag contracts. Besides this, micro, small and medium enterprises (MSMEs) will also get more partnership opportunities with the government.

On the other hand, the government has prohibited non-local suppliers to bid for procurement orders worth less than INR 200 Cr. Now, It wants states to adopt such policies as well and be in sync with the national policy.

According to an Economic Times report citing a government official on the condition of anonymity, the central government will soon hold a video conference with states to discuss the operational details of imposing preferential clauses.

Besides this, states could also be asked to adopt the Public Procurement (Preference to Make in India) Order issued by the Department for Industrial Policy and Internal Trade (DPIIT) in 2017 and follow the latest central government measures on procurement contracts. The report suggests that only two or three states have aligned their contracts with the central policy so far on giving preference to local products.

This comes in the backdrop of rising tension between India and China over a violent standoff in Ladakh’s Galwan valley, which lead to the death of 20 Indian soldiers.

The government also plans to use the situation to give a strong push for its Make In India initiative. Recently, the government kicked off Vocal for Local’ initiative to endorse local products to revive the Indian economy that has taken a hit due to the Covid-19 crisis.

In the Union Budget 2020, finance minister Nirmala Sitharaman said that the policy of ‘Make in India’ has started reaping dividends. “Under Make in India initiative, well laid out customs duty rates were pre-announced for items like mobile phones, electric vehicles, and their components. This has ensured a gradual increase in domestic value addition capacity in India,” said Sitharaman.