NEW DELHI: Tenders for government procurement will no longer be open for global companies in projects worth up to Rs 200 crore, Finance Minister Nirmala Sitharaman announced Wednesday.
Aimed at boosting the business of Micro, Small and Medium Enterprises (MSMEs), experts say, the move is unlikely to create demand for the cash-strapped firms in the short-term.
"Disallowing global tenders will give an impetus to the domestic MSMEs sector in line with the objective of Make in India campaign. The move is positive and will have long term implications but unlikely to create demand in the short term given the lack of tender that the government plans to float," Madan Sabnavis, chief economist, Care Ratings told Express.
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According to the Finance Minister, the move is a step towards "self-reliant" India and will level the playing field for MSMEs and cut out "unfair competition" from foreign companies.
Under the revised guidelines, which will be formalised after necessary changes to existing law, the government will not buy goods or services from any foreign supplier for value up to Rs 200 crore.
Only local firms will be allowed to bid on government procurement projects that are worth Rs 200 crore or less, which in turn, would boost their ability to do business.
"The proposed definitional change for MSMEs along with non-allowance of global tenders will create assured demand and make MSMEs not only competitive but also support them in becoming global brands, " pointed out Sharad Kumar Saraf, President, Federation of Indian Export Organisations.
Under the existing purchase preference policy, government departments are required to procure goods and services less than Rs 50 lakh from local suppliers with a free hand to make exemptions if the specification were not available with the local supplier.