The defence ministry will be adopting a new procurement policy that will define the level of indigenous content for defence equipment and give higher preference to local vendors in contracts and to start with, it has identified military textiles such as bulletproof jackets, boots and high altitude clothing for this purpose.
The ministry will also identify other defence equipment where the policy can be applied. The matter stems from an order issued by the Ministry of Commerce and Industry in June 2017 on ‘Public Procurement (Preference to Make in India)’. A meeting was recently held on the policy in Mumbai. Comprising of senior officers from the army, it focussed on notifying indigenous content in the supply of technical textiles by Indian vendors. This means that the defence ministry and the army with other stakeholders will define the quantity of indigenisation in textile-based items such as bulletproof jackets, bulletproof patkas (similar to helmets), super high altitude clothing, boots and sleeping bags. A similar meeting was held by Defence Secretary Sanjay Mitra in December.
According to the order, the minimum local content for an item should be 50%. While officials explained that quantum of indigenous content has not been fixed, the order adds that a ministry can prescribe a higher or lower percentage of it for a particular product.
“The nodal ministry may annually review the local content requirements with a view to increasing them, subject to availability of sufficient local competition with adequate quality,” the order said.
Another important part of the order is that the purchase preference for a product will be given to local suppliers. An official explained that in the procurement of an item where there is an adequate vendor base and if its value is Rs 50 lakh or less, then only local suppliers are eligible.
In cases where the procurement value is more than Rs 50 lakh, if the L1 (lowest bidder) is a local supplier, the contract for the full quantity will be awarded to it. However, if the L1is a foreign vendor, then only 50% of the order quantity will be awarded to it.
“Thereafter, the lowest bidder among the local suppliers, will be invited to match the L1 price for the remaining 50%. This will, however, be subject to the local supplier’s quoted price falling within the margin of the purchase preference,” explained an official.
If the lowest eligible local supplier fails to match the L1 price, then the next higher local supplier within the margin of the purchase preference will be invited to match the L1price for the remaining quantity.