Govt issues new domestic procurement norms for 49 steel products

06 Jan 2021 Editorial Team

Atmanirbhar Bharat took the next incremental step yesterday, as the government mandated the use of domestically manufactured metal and alloy items. Per this directive, locally made metal products should be preferred in public projects.

Such preference will be accorded to 49 domestically manufactured iron and steel products in public contracts. These products include:

Pipes
Railway coaches
Railway tracks
Containers
Rolling stock
Wires
Tables and household items
Tanks

In essence, this means that project managers need to revise their procurement norms. The norms apply to all central schemes.

The norms will apply to procurement exceeding Rs 5 lakh for local body projects. The government has specified minimum local value addition ranging from 20% to 50%.

“Domestic” will be interpreted on the basis of whether a company is incorporated in India.

Imports are restricted from countries that preclude Indian companies from procurement processes. This could mean a retaliation against countries like China, where Indian companies have complained of unfair treatment. While the World Trade Agreement (WTO) guidelines could see this move as restrictive, India did not sign the public procurement agreement.

Procurement managers, including public ones like the Railways, have previously argued that domestic capacity in steel items is limited. Experts have repeatedly called for domestic capacity augmentation. More immediately, steel prices have been climbing steeply. Some experts say prices will continue to rise for a few months.

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