DPIIT-led panel to vet GeM vendors from neighbouring countries, restrict Chinese suppliers

NEW DELHI: All vendors registered on the government e-Marketplace (GeM) will now have to furnish a certificate declaring their compliance with the new procurement norms that seek to restrict suppliers of Chinese origin. The Department for Promotion of Industry and Internal Trade (DPIIT) will soon set up a committee to vet all applications from countries that India shares a border with for prior registration and security clearance.

“Vendors and suppliers registered on GEMs will need to ensure they are in compliance wih the new norms,” said an official.

The move aimed at keeping Chinese companies out could hit sectors with heavy import content and dependence on supplies from China.


Infrastructure sectors such as power sector — particularly solar, telecom, highways — are likely to get impacted at different levels as the new rules apply to supply of goods and services, work contracts as also public-private partnership projects, say officials and experts. If Indian companies are to benefit, the government will have to clarify that only Indian companies owned by Indians will be allowed to participate in government tenders, experts said.

The committee, comprising senior officials from ministries of home, external affairs and other departments concerned, will draw up a framework to vet applications. “A registration committee under a joint secretary will be set up," a government official said.

DPIIT will lay down the application and format for such bidders. However, registrations will not be given unless political and security clearances are granted. The ministries of home and external affairs will work on the procedure for scrutiny of such applications.

The department of expenditure on Thursday amended its General Financial Rules, 2017, requiring prior registration from bidders from a country sharing land borders with India in order to be eligible to bid in public procurement.

Sectoral impact
A highways ministry official ET spoke with, said that while the dependence of the highways sector on Chinese companies is minimal, the government has now brought security clearance of projects to the forefront, which was so far being done after a bidder had submitted proposals. “Now, any entity before they are eligible to bid, they have to register with DPIIT, which will register companies at its own discretion," the official said.

Another market watcher said that the renewables sector, which imports around 80% of its solar panels from China, is likely to be impacted. “Construction equipment in the roads sector comes from China, but we have alternatives easily available,” the person said, requesting anonymity.

With respect to railway projects, competition in the metro rail segment is likely to decrease, since it is considerably dominated by Chinese companies, the person said.

The Indian Electrical & Electronics Manufacturers' Association (IEEMA) said the Indian electrical equipment industry has the capacity, ability and cost competitiveness to effectively service and meet the need of not only Indian industry but also enhance its exports but cautioned about higher costs in the short run.

(With inputs from Sarita Singh)