49 Indian steel, iron items to be preferred for public works

The government has put in place a new mechanism to offer preference to 49 domestically manufactured iron and steel products in public contracts, including tubes, pipes, railway tracks, wires, tables and household items, tanks, containers, railway coaches and rolling stock. The move is part of the Centre’s efforts to boost domestic production, for which it had put in place public procurement norms a few years ago. Since then, the programme has moved from the ‘Make in India’ campaign to ‘Atmanirbhar Bharat’ with steel being among the sectors that have come into special focus.

Steel is seen as a key input for a host of sectors, ranging from construction to building ships and railway lines & coaches.

In fact, the steel ministry, which has issued the order, had earlier pushed railways to buy domestically manufactured rails at a time when the public transporter was citing the lack of capacity in the country and was arguing for imports.

The latest order will extend to centrally sponsored schemes, and even local bodies executing public contracts will have to follow this if the procurement value exceeds Rs 5 lakh. The government has specified minimum domestic value addition, ranging between 20% and 50%, for various steel products.

Besides, the ministry has armed itself with powers to restrict import of iron and steel from countries that do not allow Indian companies to participate in procurement due to restrictive conditions. In case such instances are proven, then it can “restrict or exclude” bidders from that country from the eligibility norms.

A supplier or bidder shall be considered to be from a country if the entity is incorporated in that country, or majority shareholding or effective control of the entity is from that country. It will face restrictions even if over 50% of the value of the item being supplied has been added in that country that restricts Indian steel companies’ access, the new order said.

For long, Indian companies have complained of getting a harsh treatment in government contracts in China, as well as some Asean countries and the latest clause, first inserted by the department for promotion of industry and internal trade, is seen to be a counter-offensive.

While the government cannot restrict imports due to its commitments at WTO, it had not offered to bind itself by signing the public procurement agreement at the multilateral body.