The Indian government on Thursday night made an important amendment in its public finance rule to scrutinize procurement of goods and services from bidders of countries that share a land border with India on the grounds of defence concerns and national security.
Aimed largely at adversarial neighbours, India’s punitive trade action exempt countries to which India extends lines of credit or provides development assistance.
Here are a few things about the notification you should know:
Which Countries Are At The Receiving End?
India shares a land border with seven countries, namely China, Nepal, Bhutan, Pakistan, Bangladesh and Myanmar. According to the Ministry of External Affairs website, India has extended credit to Bangladesh, Nepal and Myanmar. India is engaged in developmental works in Bhutan and has disbursed over ₹424 crores in loans and grants in FY21. These countries are exempted from the new order.
What The Notification Mandates
Companies from China will now have to register with a committee set up by the Department for Promotion and Industry and Internal Trade (DPIIT) before they can become eligible to bid for a government tender.
“As per the Order, any bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the competent authority,” the order said.
Political and security clearance from the Ministries of External and Home Affairs will be mandatory to get the registration certificate.
Applicable To All States, All Govt Bodies
Apart from attached ministries and departments, and subordinate bodies, this new order will be applicable to all autonomous bodies, public sector banks and financial institutions, central public sector enterprises, public-private partnerships receiving financial support from the government or public sector undertakings, union territories and National Capital Territory (NCT) of Delhi.
The notification mandates that the Registration Committee under DPIIT shall be headed by an officer, not below the rank of joint secretary and will have officials from MHA, MEA and other concerned departments as members.
Against WTO guidelines?
Legal experts deny that India’s policy is against the WTO guidelines.”India has not acceded to the Plurilateral Agreement on Government Procurement (‘GPA’) and is only an observer. As such, the amendment in their General Financial Rules 2017 is not falling afoul of their WTO commitments especially considering that such changes have been made for reasons of national security,” says Dinesh Agrawal, Executive Director of law firm Khaitan & Co.
Source: Live Mint