Firms bag ~50 bn Make in India govt contracts
The government intervention in promoting ‘Make in India’ in public procurement has resulted in Indian companies garnering over ~50 billion in projects. The changed procurement conditions have helped companies receive business from the Railways, GAIL India, and Oil and Natural Gas Corporation.
One of the beneficiaries is Jindal Steel and Power Ltd (JSPL). It had earlier been kept out of procurement for rails, but is likely to receive 20 per cent of the tendered volume under the new policy. The size of the tender is estimated to be around ~30 billion, of which JSPL may receive orders worth ~6 billion.
Last June, the department of industrial policy and promotion (DIPP) came up with an order after the Cabinet cleared a policy to promote domestic content in government and public sector undertakings’ purchases. “Not less than ~50 billion has come in less than one year,” said Aruna Sharma, secretary, ministry of steel.
Sharma said the reservation for Indian companies was compliant with the World Trade Organization’s norms. “It makes a lot of sense since it is cheaper to buy from Indian companies. Long rails are imported but if the domestic producers are able to make long rails then it is a preferred item.”
In placing rail orders, the Indian Railways had a condition of minimum supply by the company for winning the order. Last October, JSPL dispatched the last instalment of 150,000 tonnes of rails to Iranian railways. Besides, a rails. team from the Research The Indian Railways required Design and Standard Organisation 1.4 million tonnes of rails Railways (RDSO) conducted of the tests Indian for in 2017-18. Steel Authority Government-owned of India three weeks on JSPL-manufactured Ltd (SAIL), which till now was
the sole supplier of rails, committed to supplying 950,000 tonnes of rails in 2017-18. To meet the shortfall of supply from SAIL, the Railways had invited a global tender. It was
halted following the introduction of new rules under which JSPL would be offered 20 per cent of the tendered volume. The company would have to match the lowest bid price.
“We are never against imports. If Indian manufacturer’s rates and quality are internationally competitive, they will have an edge,” said Sharma.
A standing committee, with the DIPP secretary and secretary of steel as members, reviewed the implementation of local content requirement in public procurement. The June order was required to amend the general financial rules of procurement, which make purchases from the lowest bidder mandatory.
A GAIL tender had been stalled last year after the new policy was introduced. Chinese supplier North China, which had emerged the lowest bidder for GAIL’s ~12 billion-contract for the BokaroDhamra section of the Jagdishpur-Haldia pipeline project, moved the Delhi High Court in July 2017 against the gas transporter’s decision to cancel the tender.