Govt exempts procurement of spare parts from OEMs from public procurement policy

The authorities’s public procurement coverage introduced in mid-May, which prohibited international tendering to supply items and companies as much as Rs 200 crore so as to promote home industries, is just not relevant for procurement of spare components from unique tools producers, two officers stated.

The clarification was issued on October 29 after a number of authorities issues and public sector firms—notably in vitality, telecom, well being and infrastructure sectors—confronted difficulties in sourcing particular parts domestically as they’re obtainable solely with the unique tools producers (OEMs) which might be usually overseas entities, the officers working for 2 financial ministries stated requesting anonymity.

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The finance ministry on May 15 disallowed international corporations from collaborating in authorities tenders value as much as Rs 200 crore, a transfer according to the Rs 20 lakh crore AatmaNirbhar Bharat Abhiyan (Self-Reliant India) financial stimulus and aid bundle. “Now, no Global Tender Enquiry (GTE) shall be invited for tenders up to Rs 200 crore, unless prior approval is obtained from Cabinet Secretariat,” the May 15 assertion stated. The transfer was aimed to profit home micro, small and medium enterprises (MSMEs).

Referring to the October 29 resolution, a second official stated, “The office memorandum dated May 15, 2020 will not be applicable on procurement of spare parts of the equipment, plant and machinery etc on nomination basis from original equipment manufacturer (OEM) or original parts manufacturer (OPM) as no competitive tenders are invited in such cases.”

Divakar Vijayasarathy, founder and managing companion at consulting agency DVS Advisors LLP, stated the federal government’s resolution is prudent because it permits procurement of spare components from overseas OEMs as a result of there aren’t any different sources of provide. “Since the equipment/machinery would have been procured from foreign OEMs, much before the introduction of restriction of global tendering, the spares inevitably have to be purchased from the same supplier,” he stated.

Sanjay Aggarwal, the president of PHD Chamber of Commerce and Industry (PHDCCI) stated the general public procurement rule prohibiting international tendering to supply items and companies as much as Rs 200 crore was aimed to make sure that native companies, particularly MSMEs, don’t face unfair competitors from massive overseas firms.

“The provision is to build trust and confidence among the local enterprises to enhance their production possibilities with increased participation in the economic activities of the country. At this juncture, the exceptions made on procurement of spares from original equipment manufacturers (OEMs) is justifiable as minimal or no other source /supplier is available in such cases in India,” he stated.

“I am very much sure that the intention of the government is to give first preference to the domestic MSMEs, and therefore, the exceptions made in the said order do not have any negative impact on the confidence level of MSMEs in the country,” he added.