DIPP working on policy to ensure local sourcing in public procurement

The Dollar Business Bureau

The government plans to introduce new sourcing norms, which will give preference to local vendors of goods and services in public procurement. In its bid to encourage local manufacturing, DGS&D (Directorate General of Supplies & Disposal) announced that the DIPP (Department of Industrial Policy and Promotion) is in the process of formulating a policy for the same.

Preference to local vendors may be stipulated by the new policy in procurement of products or services for various departments of the Central Government via the Government-e-marketplace (GeM). Once finalised, the policy will be implemented on the online marketplace, from where it can be monitored. 

In many ways, this move is similar to a recent 'Buy American' order signed by the US president to give precedence to American businesses in the bidding process of Federal contracts.

To further strengthen the independent functioning of this exclusive e-platform for public procurement, the Cabinet had recently announced plans for the replacement of DGS&D with a GeM special purpose vehicle. DGS&D, a government body dedicated to the development and growth of GeM operations, is likely to be dissolved by the end of October 2017.

GeM, an initiative aimed at consolidation of government needs to achieve economies of scale, transparency and cost-savings, was launched in August 2016 by the NDA regime. As of now, it has grown into a community of 2308 buyers, 5519 sellers and 191 service providers. As a registered buyer on the website, one can make a direct purchase of up to Rs.50,000, beyond which, the process of reverse auction or bidding come into play to ensure cost effectiveness.

PM Modi recently made it mandatory for all Central government departments to source their needs from this platform, while making a plea to the state governments to follow suit.

Due to the recent allegations by opposition leaders citing the government-owned e-commerce initiative as a breeding ground for corruption, the government has had to defend its initiative for 'transparency' with a lot more vigour. There are a few hurdles the government needs to overcome in order to scale up GeM operations to a size which would contribute significantly to its 'Make in India' program.