Para 1.11.5 - Local Supplier Inclusion | KartavyaDesk
Original Rule Text
9. Specifications in Tenders and other procurement solicitations: a) Every procuring entity shall ensure that the eligibility conditions with respect to previous experience fixed in any tender or solicitation do not require proof of supply in other countries or proof of exports. b) Procuring entities shall endeavour to see that eligibility conditions, including on matters like turnover, production capability and financial strength, do not result in unreasonable exclusion of local suppliers who would otherwise be eligible beyond what is essential for ensuring the quality or creditworthiness of the supplier. c) Procuring entities shall review all existing eligibility norms and conditions with reference to sub-paragraphs a) and b) above. d) Reciprocity: If Ministry of Steel is satisfied that Indian suppliers of iron and steel products are not allowed to participate and/ or compete in procurement by any foreign government due to restrictive tender conditions which have direct or indirect effect of barring Indian companies such as registration in the procuring country, execution of project of specific value in the procuring country etc., it may, if deemed appropriate, restrict or exclude bidders from that country from eligibility for procurement of that item and/ or other items relating to Ministry of Steel. e) For the purpose of sub-paragraph d) above, a supplier or bidder shall be considered to be from a country if (i) the entity is incorporated in that country, or (ii) a majority of its shareholding or effective control of the entity is exercised from that country, or (iii) more than 50% of the value of the item being supplied has been added in that country. Indian suppliers shall mean those entities that meet any of these tests with respect to India. The term ‘entity’ of a country shall have the same meaning as under the FDI (Foreign Direct Investment) Policy of DPIIT as amended from time to time.
What This Means
Para 1.11.5 of the Manual for Procurement of Goods, 2017, focuses on ensuring fair competition and avoiding unreasonable exclusion of local suppliers in government tenders. It instructs government departments to avoid setting eligibility criteria that unfairly favor foreign companies or large corporations. The goal is to encourage participation from Indian businesses, particularly smaller ones, while still maintaining quality and financial stability in the procurement process. This rule also addresses reciprocity, allowing the Ministry of Steel to restrict bidders from countries that discriminate against Indian iron and steel suppliers.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Eligibility criteria in tenders should not require proof of supply in other countries or proof of exports.
- •Eligibility conditions like turnover, production capability, and financial strength should not unreasonably exclude local suppliers.
- •The Ministry of Steel can restrict bidders from countries that discriminate against Indian iron and steel suppliers.
- •A supplier is considered to be from a country if it's incorporated there, majority shareholding is from there, or more than 50% of the item's value is added there.
- •Existing eligibility norms and conditions should be reviewed to ensure compliance with these guidelines.
Practical Example
The Ministry of Textiles is issuing a tender for the supply of cotton yarn. Initially, the tender document states that only companies with a turnover of ₹50 crore or more in the last three years are eligible. After reviewing Para 1.11.5, the procurement team realizes that this requirement might exclude many smaller, but capable, local yarn producers. They revise the eligibility criteria to allow companies with a turnover of ₹25 crore or more, or those with relevant experience in supplying government agencies, ensuring broader participation from Indian suppliers. Furthermore, the Ministry of Steel discovers that a certain country requires Indian steel companies to register and execute a project of a specific value in their country to participate in their tenders. Based on Para 1.11.5, the Ministry of Steel restricts bidders from that country from participating in tenders for steel products.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What does 'unreasonable exclusion' of local suppliers mean?▼
Does this rule mean we have to accept bids from unqualified local suppliers?▼
How does the Ministry of Steel determine if a country is discriminating against Indian suppliers?▼
What constitutes 'effective control' of an entity from a particular country?▼
If a foreign company manufactures a product in India, are they considered an 'Indian supplier'?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Test Your Knowledge
Question 1 of 3
According to Para 1.11.5 of the Manual for Procurement of Goods, 2017, what type of proof should procuring entities generally NOT require as part of eligibility conditions in tenders?
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