On July 23, 2020, the Government of India (GoI) has amended the Rule 144 of General Financial Rules (GFRs) 2017 entitled “Fundamental principles of public buying” by inserting sub rule (ix) which has imposed restrictions on bidders of countries sharing land borders with India in public procurement tenders. This decision has been taken to strengthen the defence and national security of India. The order in this regard has been issued by the Department of Expenditure (DoE), Ministry of Finance.
- It should be noted that India shares its land border with China, Nepal, Bhutan, Pakistan, Bangladesh, Afghanistan and Myanmar.
- The amendment has covered public sector banks (psbs) and financial institutions, Autonomous Bodies, Central Public Sector Enterprises (CPSEs) and Public Private Partnership projects receiving financial support from the Government or its undertakings.
- By invoking the provision of Article 257(1) of the Constitution of India, the central government has also directed state governments to implement this order for all public procurement.
Bidding Eligibility for border countries as per amendment:
Any bidder from countries sharing land borders with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the Competent Authority.
- The Competent Authority for registration will be the Registration Committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT).
- The competent authority is not liable to give reasons in case of cancellation of registration of a bidder amid national security reasons.
- Bidders will also be required to take mandatory political and security clearance from the Ministries of External and Home Affairs
Exceptions under new amendment:
-Relaxation will be provided for procurement of COVID-19 medical supplies till December 31, 2020.
-Also, the order for prior registration will not apply for countries to which the GoI extends lines of credit, even if they share a land border with India.
- As per official data, out of these, the government has extended lines of credit to Bangladesh, Nepal, Myanmar, exempting them from the new order. India has extended lines of credit totalling $30.59 billion to 64 countries, including 41 from Africa.
About Department of Expenditure (DoE):
Secretary– T. V. Somanathan
Recent Related News:
On April 24, 2020, n exercise of the powers conferred by clauses (aa) and (ab) of sub-section (2) of section 46 of the Foreign Exchange Management Act, 1999, the Central Government amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 which has mandated prior approval of the GoI for foreign investments from countries that share border with India, to prevent opportunistic takeover of domestic firms amid COVID-19 pandemic.