The government has placed curbs on the procurement of finished goods from China by firms supplying goods and services under the public procurement system, while allowing the use of Chinese raw material or components without prior permission.
“A bidder is permitted to procure raw material, components, sub-assemblies, etc. from the vendors from such countries which shares a land border,” the Department of Expenditure in the Finance Ministry has said in a memo, arguing that such procurement cannot be equated with sub-contracting.
Last July, the government had altered its public procurement norms to ensure that contractors executing works and turnkey projects do not sub-contract any work to players from ‘a country sharing a land border with India’ unless the proposed sub-contractor was registered with the Indian government.
A registration committee had been set up by the Department for Promotion of Investment and Internal Trade under the Commerce and Industry Ministry to deal with such proposals. However, no explicit restriction had been placed on successful bidders in public procurement of goods and services, on sourcing their deliverables from countries such as China.
‘Rebooting approvals’
Now, vendors proposing to source finished goods from Chinese suppliers will need to seek registration with the committee.
The development assumes significance at a time the government is considering rebooting approvals for China-related investment proposals following the disengagement at the Indo-Chinese border after an extended period of tension.
