Restrictions on bidders from nations sharing land borders

In a move that will mainly affect entities from China, the government has amended the General Financial Rules, 2017, imposing restrictions on public procurement from bidders of countries that share a land border with India, citing grounds of defence and national security.
Bidders from these countries will be eligible only if they are registered with the Registration Committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT). They will also be required to take mandatory political and security clearance from the ministries of External Affairs and Home.
The central government has also directed state governments to implement this order for all public procurement.
Relaxation will be provided for procurement of Covid medical supplies till December 31. Also, the order for prior registration will not apply for countries to which the government extends lines of credit or provides development assistance, even if they share a land border with India.
India shares its land border with China, Nepal, Bhutan, Pakistan, Afghanistan, Bangladesh and Myanmar.

The latest move mandating registration and security clearance for bidders of countries sharing land borders with India, in public procurement tenders, will effectively put in place more filters for entities from China.
The restrictions follow a series of steps taken in recent months to prevent the influx of Chinese products and investments into India.
On June 23, the government made it mandatory for sellers on the Government e-Marketplace (GeM) portal to clarify the country of origin of goods when registering new products.
The GeM portal now allows buyers to reserve a bid for Class I local suppliers, or suppliers of those goods with more than 50 per cent local content. For bids below Rs 200 crore, only Class I and Class II (those with more than 20 per cent local content) are eligible.
The decision came in the backdrop of the government’s push for Atmanirbhar Bharat, and following the clashes between Indian and Chinese troops in Galwan Valley on June 15, which prompted several government departments to launch an offensive against imports from China.

At $70.32 billion in 2018-19 and $62.38 billion between April 2019 and February 2020, China accounts for the highest proportion of goods imported into India — around 14 per cent in 2019-2020 so far.
In April, the government amended FDI rules mandating prior approval for investment by entities in countries that share land borders with India.
The government stated that prior approval was compulsory for foreign investments from all countries sharing borders with India to prevent “opportunistic takeovers” of domestic firms following the pandemic.

The Government e-Marketplace (GeM) is a 100 percent government-owned company setup under the aegis of the Ministry of Commerce and Industry. GeM aims to enhance transparency, efficiency and speed in public procurement.

In 2017, the government made it mandatory for all the departments and ministries to source goods and services from the GeM.

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