Government to Give Purchase Preference To Local Manufacturers in the Power Sector

In an initiative to boost the ‘Make in India’ program, the Ministry of Power has issued a notification to provide purchase preference for local suppliers in the power sector.

Only ‘Class-I local suppliers’ will be eligible to bid irrespective of the purchase value while procuring goods, services, or works with sufficient local competition.

The local content requirement to categorize a bidder as a ‘Class-I local supplier’ is a minimum of 50%, and ‘Class-II local supplier’ is 20%.

Only Class-I local suppliers and Class-II local suppliers will be eligible to bid except when a global tender is issued. For global tenders, non-local suppliers will also be eligible to participate in the bidding process and Class-I local suppliers and Class-II local suppliers.


A global tender will be issued for procuring goods more than ₹2 billion (~$26.91 million), with the approval of the authority designated by the Department of Expenditure.

In March last year, the Ministry of Power had issued a public procurement order with revised requirements for locally made components in electrical equipment used in the power distribution center.

Purchase preference

For procuring goods, Class-I local suppliers will be given preference over Class-II local suppliers and ‘non-local suppliers.’

If Class-I local supplier quotes the L1 bid, the contract for the total quantity will be awarded to the L1 bidder. If the L1 bidder is not a Class-I local supplier, 50% of the quantity will be awarded to the L1 bidder. The lowest bidder among the Class-I local suppliers will be invited to match the L1 price for the remaining 50% quantity.

If the Class-I local supplier fails to match the L1 price, the next higher supplier within the margin of preference will be invited to match the L1 price for the remaining quantity.

Awards to multiple bidders

For tenders, where the contract is to be awarded to multiple bidders subject to matching the L1 price, ‘Class-I local suppliers’ will get purchase preference over ‘Class-II local suppliers’ and ‘non-local suppliers.’ Only ‘ Class-I local suppliers ‘ will be eligible to bid if there is sufficient local capacity and competition to procure the items.

If a ‘Class-I local supplier’ qualifies for the award of contract for at least 50% of the tendered quantity, the contract may be awarded to all the qualified bidders as per the provisions of the bidding document. However, if the ‘Class-I local supplier’ does not qualify for at least 50% of the tendered quantity, a ‘Class-I local supplier’ will be preferred over the ‘Class-II local supplier’ and the ‘non-local supplier’ provided the quoted rate falls within the 20% margin of the highest quoted bidder.

First preference will be given to the lowest quoting ‘Class-I local supplier,’ whose quote falls within the 20% margin. If the lowest quoting ‘Class-I local supplier’ does not qualify for purchase preference, the opportunity will be given to the next ‘Class-I local supplier’ falling within the 20% margin.

Small purchases exempted

Procurements of value less than ₹500,000 (~$6,725) will be exempted from the provisions of this order. However, it should be ensured by the procuring entities that the buying is not split to avoid the provisions of the order.

Specifications in tenders

The procuring entity should ensure that the eligibility conditions do not require proof of supply to other countries. The procuring entities should ensure that eligibility conditions do not result in the unreasonable exclusion of ‘Class-I local suppliers’ and ‘Class-II local suppliers.’

The notification adds that entities of countries that do not allow Indian companies to purchase items will not be allowed to participate in the procurement process in India.

The notification states that all administrative departments whose purchases exceed ₹10 billion (~$134.51 million) per annum should update their procurement projections on their respective websites for the next five years.

In 2018, the MNRE had issued a memorandum to implement public procurement in the renewable energy sector giving preference to ‘Make in India’ products. It was in response to an order issued by the Department of Industrial Policy and Promotion to promote.

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