India to Demand Foreign Firms to Source Local Material for Government-Run Projects

Since May 2020, the Indian authorities have been aggressively promoting the PM Modi led “Aatmanirbhar Bharat” (self-reliant) campaign, by organizing various competitions and initiatives, urging people to go ‘vocal for local’ and urging the domestic manufacturers to cut down on imports.

In an attempt to support the domestic market further, the government on late Friday passed an order demanding foreign firms to source more local material when working for any government-run projects. The order also stated that firms of the respective countries which do not allow Indian companies to participate in their government-run projects would also be not allowed to place tender bids for any Indian government project.

The Indian trade ministry’s Department for Promotion of Industry and Internal Trade (DPIIT) has ordered all the government administrations to notify about all their projects planned up to next five years, which are valued above $135.96 million (Rs10 billion).

DPIIT has still not made any announcement citing the local content requirement threshold for any foreign firm partnering with state run projects. However, the current threshold is said to be 20–50%. This move by the Indian government is an effort to aid the domestic manufacturers, and to encourage Indians to use more of the domestic produce to revive the economy.