News & Analysis

Make in India: Govt. Cracks Down on It’s Own Rules

The DPIIT has shared a list of restrictive conditions that makes local suppliers non-compliant with the government's public procurement norms

The Department for Promotion of Industry and Internal Trade (DPIIT) has been at the forefront of the Make in India and AtmaNirbhar Bharat campaigns in more ways than one. For starters, they’re the nodal department working on the ONDC protocols – one that could potentially change the way eCommerce is conducted by moving away from platforms to networks. 

As part of this agenda, the DPIIT, under the Ministry of Commerce and Industry, has made its intentions known of creating a level-playing field for small merchants who can co-exist with the large ones in the new era of digital commerce. One where online discovery doesn’t depend on what you pay to get discovered and where delivery and payment isn’t centralised. 

 

Ambiguity is the name of the game

So, it is not surprising that this very department has now come out with a list of restrictive and discriminatory conditions implemented by procurement agencies of other ministries. These 20-plus list keeps local suppliers away from government procurement, by making them non-compliant via these rules, especially in the case of Make in India products. 

Quite obviously, we can say that this is an oversight and not intentional, given that even within the same government department, one often comes across contradicting rules, making for an opaque system that contributes to bureaucratic delays. That one government department has taken the onus to find and question such rules is in itself a big shift. 

Coming to the actual rules, some of them relate to getting additional bank guarantees for local suppliers, delayed payment rules, excessive reliance on past experience as well as mandatory foreign certifications without actually putting up an equivalent one from India. Some of these rules pertain to the highly lucrative medical and electronic device exports.  

 

Procurement norms that favour imports

A report published in the ET quotes unnamed officials to suggest that agencies have been violating procurement norms in their tendering processes through such discriminatory and restrictive practices that virtually render local suppliers out of the race. So, what’s next? Well, the DPIIT is sharing the list with relevant ministries to seek a quick redress of the matter. 

What’s worrisome, though not to those who’ve dealt with government in the past, is that such a lacuna comes exactly at the time when the government has highlighted self-reliance and reduced dependence on imports as a key strategic initiative. How this can be acheived by placing such conditions on local manufacturers is what could potentially leave some of our mandarins with a red face. 

 

All set for Make in India Phase-2

Small mercies that the DPIIT came up with the list and provided some information to the media on this front. For, the government is just about getting ready to launch Phase-2 of the Make in India campaign with a focus on 27 sectors, of which as many as 24 would rely heavily on domestic manufacturing and increased exports.

The officials were quite critical of some conditions such as  export experience to G8 countries, excessive turnover requirement as a pre-qualifying criteria, as they felt none of these were essential to the actual Make in India plan. “What is totally unacceptable is that some procurement agencies have obviously set up specifications that only suit imported products. Now, how are we supposed to reduce import dependence if we do not encourage indigenous manufacturer or production?” asks a senior official we spoke to.

Of course, the DPIIT is quite clear that they would be more than happy to discuss some of these norms and possibly come out with suitable changes. However, they are also quite clear that this list is only indicative for now and could get updated as more such ambiguities are brought out during the research.  

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