Public Procurement Order, 2017 -Amended To Curb Chinese Investment

he Government of India has amended the public procurement (Preference to make in India ) order 2017. These amendments would curb the Chinese investment in India.

Key Facts

  • The amendment states that the entities from other countries that do not allow Indian companies to participate in their government procurement procedures shall not be allowed to participate in Indian government procurement procedures.
  • It has been done to promote Make in India and to curb investments from neighboring countries with emphasis on China.
  • It will enable the departments and nodal Ministries to increase the share of local content for class 1 and class 2 local suppliers.
  • As per June 2020 data,  share of class 1 and class 2 local suppliers were fixed at 50 % and 20 % respectively.
  • After these amendments, Government of India will set an upper threshold value for procurement above which foreign companies will have to create joint ventures with Indian companies so as to participate in government tenders.

Public Procurement

It is a process by which the government and state-owned enterprises  purchases goods from the private sector. It uses money from the collected tax to procure the goods.

Public Procurement Policy of India

The public procurement policy in India aims to incentivize the production that is linked with the local content requirements. The Government of India has also created a  public procurement policy for the micro and small enterprises. As per the policy, 25 % of total procurement made by  the department, Central Ministries and public sector enterprises must to be from the micro and small enterprises.

Types of Suppliers

  • Class-I Local supplier – whose goods, services or works offered for procurement, has local content equal to or more than 50%.
  • Class-II Local supplier – whose goods, services or works offered for procurement, has local content more than 20% and less 50%.
  • Non-Local supplier – whose goods, services or works offered for procurement, has local content less than or equal to 20%.

Local Content

Local content is the value that is added to the goods, services or work locally, in the country itself.