Bidders from Neighboring Countries to Face Restrictions for Indian Government Tenders

The central government has amended the General Financial Rules 2017, which will allow it to impose restrictions on bidders from countries that share a land border with India.

According to the government’s statement, the amendments have been made keeping in mind the national security of the country. To this effect, the department of expenditure has issued a detailed order on public procurement to strengthen the national security of the country.

India shares land borders with seven neighboring countries of Pakistan, Bangladesh, China, Nepal, Myanmar, Bhutan, and Afghanistan.

According to the order, bidders from countries sharing a land border with India would be eligible to bid in any procurement related to goods, services (consultancy and non-consultancy), or works only if they are registered with the competent authority.

The competent authority, in this case, would be the registration committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT). Along with this, clearance from the ministries of external affairs and home affairs would also be mandatory.

The order would be applicable for public sector banks and financial institutions, autonomous bodies, central public sector enterprises, and public-private partnership projects receiving funding from the government or its agencies.

The central government has written to the chief secretaries of state governments and state undertakings for the implementation of this order. For procurement at the state level, the competent authority would be constituted by the state government, but political and security clearance would be necessary.

As per the order, relaxations have been provided in certain cases, which include the procurement of medical supplies for the containment of the COVID-19 pandemic until December 31, 2020. The government has also exempted countries to which India extends lines of credit or provides assistance from prior registration.

These new guidelines would apply to all new tenders. In case of tenders for which the bids have already been invited, and if the first round of evaluation of qualification has not been completed, the bidders who are not registered will be treated unqualified. And if that stage has been crossed, the tender will be canceled, and the whole process will start from the beginning. The order would not be applicable for procurement by the private sector.

Last month, the Ministry of New and Renewable Energy announced a Foreign Direct Investment (FDI) cell to process the FDI proposals. According to the FDI policy, a non-resident entity can invest in India, subject to the FDI policy except in those sectors or activities which are prohibited like defense, space, and atomic energy. The revised policy said that any investment by an entity of a country that shares a land border with India or where the beneficial owner of investment is a citizen of any of those countries would need government approval. Earlier, only Bangladesh and Pakistan were under this category, which has now been expanded to all neighboring countries sharing the border with India. Now, the FDI proposals involving investments from these countries will be processed by the concerned administrative ministry or department.

Previously, the Ministry of Commerce and Industry in April 2020, revised its FDI policy to curb “opportunistic takeovers or acquisitions” of Indian companies amid the ongoing pandemic caused by the coronavirus.

Recently, the Ministry of Power issued a notice mandating all power supply system equipment, components, and parts imported into the country must pass through a check for harmful embedded software. These imported parts will be checked for malware, trojans, and any potential cyber threats as well as for adherence to Indian standards.