Public procurement contracts for local sellers cross 50k mark post tweak to global tender enquiry rules

Trade, import and export for MSMEs: Following the Department of Promotion of Industry and Internal Trade (DPIIT) order in June to enhance participation of local businesses in public procurement under the Atmanirbhar Bharat campaign, 50,346 contracts have been awarded between June 4, 2020, and September 15, 2020, according to the data available on the government e-commerce portal GeM. The contracts awarded to various sellers followed the DPIIT’s order on June 4 under Rule 153 (ii) of the General Financial Rules (GFR) 2017 to ensure that local firms are allotted the tender under the campaign. The information was shared by the Commerce Minister Piyush Goyal in the Rajya Sabha recently.

DPIIT in its order had also stated that in the procurement of all goods, services or works, not covered by sub-para 3(a), and with an estimated value of purchase less than Rs 200 crore, in accordance with Rule 161 (iv) of GFR 2017, global tender enquiry shall not be issued except with the approval of competent authority as designated by Department of Expenditure. “Only Class-I local supplier and Class-II local supplier, as defined under the order, shall be eligible to bid in procurements undertaken by procuring entities, except when a global tender enquiry has been issued,” the order read.

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Rule 161 (iv) of GFR 2017 was amended by the Department of Expenditure as per its May 15, 2020 order to restrict global tender enquiry for contracts worth more than Rs 200 crore. This was intended to enable floating of local tenders by procuring entities of the government to benefit local entities.

Class-I and II local suppliers are defined based on the share of ‘local content’ in their goods and services. While Class-I are those having local content equal to or more than 50 per cent, Class-II suppliers have local content between 20 and 50 per cent. Local content is referred to the total value of the item procured less the value of imported content in the item as a proportion of the total value. Public procurement from micro and small enterprises by the government organizations has been growing 3-4 per cent year-on-year. From 23.11 per cent in 2017-18, the procurement went up to 26.32 per cent in 2018-19, 30.95 per cent in 2019-20 and 33.12 per cent till date, data from MSME Sambandh portal showed.