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India Restricts Neighbouring Nations From Public Procurement Amid China Faceoff

Vendors based in bordering countries will be affected but the aim is firmly on China.



A trainee uses a mouse while sitting in front of a computer screen during a class on the Government e Marketplace (GeM) website at the National Institute of Financial Management in Faridabad, Haryana (Photographer: Udit Kulshrestha/Bloomberg)
A trainee uses a mouse while sitting in front of a computer screen during a class on the Government e Marketplace (GeM) website at the National Institute of Financial Management in Faridabad, Haryana (Photographer: Udit Kulshrestha/Bloomberg)

India restricted vendors based in bordering countries from supplying goods and services to government departments citing “national security” in another retaliatory move against the Chinese firms amid a border standoff.

Suppliers from nations sharing border with India will now have to register with the ‘competent authority’—comprising officers from commerce, home and foreign ministries—to be eligible to bid for procurement of goods and services by public departments, said a statement. This wasn’t necessary earlier.

The fresh provisions will apply to all new tenders, and unregistered bidders won’t be eligible. Existing tenders that have crossed the first stage, including evaluation of eligible bidders, will be cancelled if shortlisted unregistered bidders are from neighbouring countries.

It's the latest in a series of measures aimed against firms from China, one of India’s largest trading partners, after a border scuffle left 20 Indian and an unknown number of Chinese soldiers dead. Earlier, the government restricted opportunistic takeovers of Indian firms by investors from neighbouring countries, asked suppliers to clearly specify the country of origin on the government’s portal and banned 59 Chinese apps, including TikTok and CamScanner.

The ‘competent authority’ will be a registration committee set up by the Department for Promotion of Industry and Internal Trade, comprising officers from the department, and foreign and home ministries. Political and security clearance from the external affairs and home ministries will be mandatory.

The fresh restrictions have been placed by amending General Financial Rules—executive orders that need to be followed on matters involving public finance. It covers public sector banks, financial institutions, state-owned firms, and public-private partnership projects receiving financial support from the government.

The central government has also invoked the provisions of Article 257(1) of the Constitution of India and ordered states to implement the changes for procurements.

The order, however, exempts procurement of medical supplies for containment of Covid-19 pandemic till Dec. 31, 2020. Countries that receive lines of credit or development assistance from India have also been exempted. India provides development assistance to Nepal, Afghanistan, Bhutan, among other nations.