National Procurement Policy

Public procurement in India is about 30% of GDP and most vulnerable to corruption.

It is characterized by cartelization, rigging, monopoly, corruption, poor quality of procured goods and services etc.

Apart from reduction in corruption, ensuring access for government to best product and service at reasonable prices etc., public procurement policy can bring in the following financial benefits :

It will boost domestic manufacturing and service provision

It will enhance income and employment.

It will facilitate flow of capital and technology into domestic manufacturing and services.

Preference will be given to local content in government procurements

Local content essentially means domestic value addition

Local suppliers are those whose goods or services meet minimum thresholds (50%) for local content.

For the procurement of goods below Rs 50 lakhs, only local suppliers will be eligible if the Nodal Ministry determines that there is a availability of sufficient local capacity and local competition.

For procurements valued above Rs 50 lakhs or in case of insufficient local capacity and if the lowest bid happens to be from a non local supplier, then the lowest-cost local supplier who is within a margin of 20% of the lowest bid, will be offered an opportunity to match the lowest bid.

If the order can be split into more than one supplier, the order will be split between the non-local supplier and the local supplier.

Small procurements valued below Rs 5 lakhs are exempted from the policy.

The order also covers autonomous bodies and all the government entities under the control of the government.

The policy primarily favours self certification for verification of local content. However, if the declarations were found to be false then the supplier will have to face penal consequences.

A Standing Committee in Department of Industrial Policy and Promotion (DIPP) will oversee the implementation of this order. It will further make recommendations to Nodal Ministries and procuring entities.

Enhancing data management capabilities and standardisation which will ensure transparency in public procurements.

Need clarity regarding multiple references to ‘rules’ in the Bill which have led to confusion and ambiguity.

Need to upgrade infrastructure (For e.g. IT Infrastructure for e-procurement) and the skill sets of the officials involved in procurement exercise in-line with best practices.

However, apart from these, certain other reforms like:

Strengthening CCI to check cartelization while procurement

Adoption of Global best practices like OECD Guidelines In Public Procurement

These all steps along will go a long way in reforming the procurement process in India