India:
Fresh Requirements In India’s Public Procurement Policy – A Sneakpeek!
To print this article, all you need is to be registered or login on Mondaq.com.
Pursuant to Press Note 3 and NDI Amendment Rules, India’s
FDI policy underwent an amendment in March & April 2020,
requiring a prior approval of the Government of India, for
investments from countries that share a land border with India
(Neighboring Countries). Largely, the above
concerns incoming investments from China since China has been one
of the largest investors into India out of all the other
Neighboring Countries. Parallelly, in July 2020, the Indian
government also revisited its public procurement policy to notify
amendments to the general financial rules, post which, entities
from the Neighboring Countries, prior to participating in public
procurement contracts and supplying goods and/or services to the
government, need to procure a prior registration with the
Department for Promotion of Industry and Internal Trade
(DPIIT). Even entities that are privately held
or beneficially held by individual(s) from the Neighbouring
Countries are now required to mandatorily pre-register with the
DPIIT as a pre-requisite for participating in bids for public
procurement in India. However, tenders and contracts that have
already been concluded or awarded will not be subject to these
pre-registration requirements.
In order to facilitate a seamless process for registration, the
DPIIT has introduced a separate application process for bidders
from the Neighboring Countries to procure registration enabling
them to bid in public procurement contracts in India. This DPIIT
registration will be valid for a period of 1 year from the date of
its issue. A bidder can seek registrations for multiple items
(goods/ services/ works) in one single application by providing
requisite details for each such item. In addition to the said
registration from DPIIT, prospective bidders from China will also
have to procure security and political clearance from the Ministry
of Home Affairs, similar to the security clearance under FDI. A
brief note on the nature of activities undertaken by the bidder,
its beneficial owner(s) and details of the tender and
goods/works/services proposed to be supplied along with reasons for
seeking registration, is required to be furnished along with the
security clearance application.
Broadly, the application for procuring DPIIT registration is
divided into 7 annexures requiring information and supporting
documents in relation to beneficial ownership of the bidder,
details of manufacturer/ service provider/ contractor (if any),
description of items (goods/ services/ works) for which
registration is sought, financial details and details of past
performance of contracts by the bidder. The following points are
key in relation to the said application:
- The application for registration must be submitted in physical
form with the office of the DPIIT in New Delhi, India, in 7 hard
copies with the signature of the authorized signatory on all pages
of the application. - Any change in the beneficial ownership of the bidder/
manufacturer/ contractor/ service provider shall render the
registration annulled, warranting a fresh registration. - The application must include the name of the bidder, the type
of business entity, address of the registered office of the bidder,
details of the beneficial owner of the bidder, category of
registration, description of goods/services/ works, financial
details for the past 5 years, details of contracts received in the
last 5 years from public procuring entities and from private
sectors in India and details of outsourced components/ goods and
subcontracted works and services proposed to be used in execution
of the contract. - The application must be supported with certain documents
including certificate of incorporation of the bidding entity, list
of beneficial owners duly certified by a chartered accountant,
financial details in INR/ US Dollar for last 5 financial years duly
certified by practicing chartered account in India, among
others. - DPIIT registration will be subject to the bidding entity
obtaining a security and political clearance from the Ministry of
Home Affairs.
Prescribing a new format for DPIIT registration by Neighboring
Countries will definitely ease the process of obtaining
registration and will also act as a single window clearance, given
that the bidding entity will not be required to submit
separate applications with the Ministry of Home Affairs for
security and political clearance. Further, obtaining registration
from the DPIIT for participation in public procurement bids will be
valid for all procurements, not only at the central government
level but also at the state level. However, by amending the general
financial rules to impose restrictions on public procurement, the
central government, through DPIIT is empowered to reject or
cancel the registration of a bidding entity (even if genuine)
without according any reasons for the same. Such an unilateral
power at the hands of the competent authority, being DPIIT, should
be reconsidered and the applicants should be given an opportunity
of being heard and also a chance to submit any additional documents
or information that will aid the DPIIT in granting the requisite
registration, especially when applications are genuine and there
are no eminent national security threats which may call for a
rejection.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Government, Public Sector from India
