With eye on China, government imposes restrictions on public procurement from countries with land border with India

New Delhi [India], July 23 (ANI): With an eye on Chinese investments, the Government on Thursday amended the General Financial Rules 2017 to enable the imposition of restrictions on bidders from countries which share a land border with India on "grounds of defence of India or matters directly or indirectly related including national security".
The Department of Expenditure issued a detailed order on public procurement to strengthen the defence of India and national security.
The decision comes after the government last month banned 59 China-linked mobile apps including Tik Tok, UC Browser "prejudicial to sovereignty and integrity and defence" of the country and "security of the state and public order".
India had earlier revised its FDI policy with the objective of preventing "opportunistic takeovers" of firms hit by the lockdown induced by the COVID-19 outbreak.
The order issued on Thursday said that bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the competent authority.
"The competent authority for registration will be the Registration Committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT). Political and security clearance from the Ministries of External and Home Affairs respectively will be mandatory," it said.
The order takes into its ambit public sector banks and financial institutions, autonomous bodies, Central Public Sector Enterprises (CPSEs) and Public-Private Partnership projects receiving financial support from the government or its undertakings.
"State governments play a vital role in national security and defence of India. The government of India has written to the Chief Secretaries of the state governments invoking the provisions of Article 257(1) of the Constitution of India for the implementation of this order in procurement by State Governments and state undertakings.
"For state government procurement, the competent authority will be constituted by the states but political and security clearance will remain necessary," the Finance Ministry said in a release.
The release said relaxation has been provided in certain limited cases, including for the procurement of medical supplies for containment of COVID-19 global pandemic till December 31, 2020.
By a separate order, countries to which the Government of India extends lines of credit or provides development assistance have been exempted from the requirement of prior registration.
The new provisions will apply to all new tenders.
In respect of tenders already invited, if the first stage of evaluation of qualifications has not been completed, bidders who are not registered under the new order will be treated as not qualified. If this stage has been crossed, ordinarily the tenders will be cancelled and the process started de novo.
The order will also apply to other forms of public procurement. It does not apply to procurement by the private sector, the Finance Ministry said.
The decisions have come amid border tensions with China in Eastern Ladakh.
There have been reports that People's Liberation Army (PLA) is not in a mood to de-escalate the situation on the Line of Actual Control (LAC) as it has continued deployment of around 40,000 troops in its front and depth areas for the Eastern Ladakh sector.
The Chinese are also not honouring their commitment for disengagement at the friction points in Eastern Ladakh and not moving back as per the agreed terms during the multiple rounds of talks at the government and Army level and intervention at the senior level like the one done by the National Security Advisor couple of weeks ago would be required for further progress.
The disengagement process has also not made any progress since the last round of talks between the two Corps Commanders held last week and ground positions have also not changed.
The government had earlier said that a non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
"However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the government route," it had said. (ANI)