10 September 2020

India strengthens ‘local content' requirements

by Jon Grevatt

The Indian Ministry of Defence (MoD) has issued new guidelines that support its efforts to maximise the local defence industrial base’s involvement in defence production programmes.

The measures, published in a notification in late August, are aligned with an earlier revision of an Indian public procurement order that seeks to ensure preference is given to goods and services that have more than 50% local content.

This order, which was updated by the government in June 2020 in line with efforts to boost the economy, is known as the ‘Preference to Make in India’ directive and is intended to “promote the manufacturing of goods and services in India, with a view to enhance income and employment” across all industrial sectors.

India has issued guidelines that seek to enhance the local content in military platforms including Kalvari (Scorpène)-class submarines (pictured) being built for the Indian Navy. (Indian Navy)

The MoD said that its new notification aligns requirements in previously published defence procurement guidelines with definitions in the updated ‘Preference to Make in India’ directive for different classes of local suppliers.

These definitions include ‘Class-I local suppliers’ that produce goods that have more than 50% local content; ‘Class-II local suppliers’ that produce goods that have between 20% and 50% local content; and the inclusion of a ‘margin of purchase preference’, allowing local purchases even if the procured product is not the cheapest.

The MoD notification also states that ‘Class-I local suppliers’ shall be eligible to bid for contracts irrespective of purchase value, and that in defence procurements valued at less than INR2 billion (USD27.2 million) only ‘Class-I local suppliers’ and ‘Class-II local suppliers’ can bid for contracts, except those that are being procured through a global tender.

The Indian Ministry of Defence (MoD) has issued new guidelines that support its efforts to maximise ...

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