Amid inflated cost row, Modi government nixes Chinese COVID-19 test kits order

A legal dispute in Delhi High Court between the distributor and importer of rapid test kits exposed their purported profiteering in kits sold to the Indian government.

Published: 28th April 2020 09:07 AM  |   Last Updated: 28th April 2020 09:07 AM   |  A+A-

Medical staff seen outside emergency ward at Max Hospital in New Delhi's Pratapganj on Monday. (Photo | Parveen Negi/EPS)

Express News Service

NEW DELHI: The Centre on Monday asked states to return the rapid antibody testing kits for Covid-19 distributed to them while making it official that the kits procured from two Chinese companies have been found faulty, and that the orders have been cancelled.

The decision came following a meeting between Prime Minister Narendra Modi, Union health secretary Preeti Sudan and the head of Indian Council of Medical Research (ICMR), Dr Balram Bhargava, said sources.

The development comes even as a massive controversy has broken out over the pricing at which the ICMR under the Union health ministry had struck the deal to procure 5.5 lakh kits at Rs 600 each.

“Several states have procured rapid antibody kits and on their demand, ICMR has also provided these kits with clear instructions that they are to be used only for surveillance purpose,” a letter issued by the ICMR to states said.

“Some states have raised issues regarding their performance during the testing exercise that they have undertaken. ICMR thereafter has also evaluated the kits from Guangzhou Wondfo and Livzon in field conditions. The results have shown wide variation in their sensitivity despite the early promise of good performance for surveillance,” it added.

A legal dispute in Delhi High Court between the distributor and importer of rapid test kits exposed their purported profiteering in kits sold to the Indian government.

Observing that 61% mark-up on such test kits is on the “higher side” but “more than sufficient”, the court disallowed a 145% profit from the landed price of Rs 245 to ICMR’s purchase price of Rs 600 per test and slashed it to Rs 400.

The health ministry, in a detailed clarification on Monday, explained why it decided to go to Wondfo’s exclusive distributor for India for the kit and the problems it found (see box).

The Centre said this was the first-ever effort by any Indian agency to procure such kits and the rate quoted by the bidders was the only reference point.ICMR has not made any payment, said the ministry, and the government does not stand to lose a single rupee.

ICMR’s side of the story

ICMR identifies two companies, Biomedemics and Wondfo, with international certifications, for procurement of rapid antibody test kits

For Wondfo, evaluation committee got 4 bids with Rs 1,204, Rs 1,200, Rs 844 and Rs 600 as price quotes. It picked Rs 600 offer on top of the list

ICMR also tries to procure kits directly from Wondfo. But quotation received for direct procurement had the various issues

Quotation did not have a commitment on logistics; was on 100% direct advance without guarantees; rates in US dollars without any clause on price fluctuation

So, ICMR approached Wondfo’s exclusive distributor for India, who quoted an all-inclusive Free on Board (logistics) price without advance payment

After receipt of supplies, ICMR conducts quality checks on the kits in field conditions. Wondfo and another supplier Livzon’s kits found under-performing, orders cancelled

Since ICMR did not opt for procurement with 100% advance payment, the govt will not lose even a single rupee

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