India twists the knife, will only cancel tenders that Chinese firm are set to win
On Thursday, the Centre said that companies from nations that share a border with India will be barred from bidding for government contracts for goods and services until they register with the industry department.Updated: Jul 27, 2020, 09:03 IST
A bidding process already underway for an Indian government contract will not be scrapped merely because of a Chinese firm’s participation, two government officials said on Sunday, adding that this is being done to avoid unnecessary delays in the execution of key projects.
On Thursday, the Centre said that companies from nations that share a border with India will be barred from bidding for government contracts for goods and services until they register with the industry department. It said the decision was taken to “strengthen the defence of India and national security”; the move is being seen as an effort to counter China amid a tense border stand-off with the neighbouring nation.
The order, which did not name any country, is applicable for all prospective tenders, and also for the tenders that have already been invited but not yet awarded.
The two government officials, who spoke on condition of anonymity, said an ongoing tender process will be scrapped only if one of the technically qualified bidders is a Chinese firm and it is also the lowest bidder.
Tender evaluations often have two parts -- technical qualification and price bid. A company emerges as a shortlisted bidder only after it meets all technical qualifications. After that, price quotes of all shortlisted bidders are evaluated and the lowest price bidder gets the contract, the first official said.
An order clarifying the move has already been circulated to all ministries, public sector units and state governments asking them not to scrap earlier tenders and initiate fresh tendering processes only because of the presence of a Chinese entity as one of the qualified bidders, the officials said.
“In other words, the tender should not be scrapped if it is unlikely to be awarded to a Chinese company,” the first official added.
The clarification was issued by the Union finance ministry on Friday after stakeholders raised concerns that retrospective implementation of the July 23 order would lead to scrapping of all tenders, resulting in a huge loss of valuable time, the second official said.
There was some confusion related to a clause of the July 23 order about ongoing tenders, he said. The clause of the Thursday order read, “If the qualified bidders include bidders from such countries [read China], the entire process shall be scrapped and initiated de novo. The de novo process shall adhere to the conditions prescribed in this order.”
The clarification issued on July 24 said “qualified bidder means only those bidders who would otherwise have been qualified for award of the tender after considering all factors including price”.
“If bidders from such countries would not have qualified for award for reasons unconnected with the said order (for example they do not meet tender criteria or their price bid is higher... or any other reason) then there is no need to scrap the tender/start the process de novo.”
India shares land borders with China, Pakistan, Bangladesh, Myanmar, Nepal and Bhutan. But the July 23 order exempts some of these countries to which India extends lines of credit or provides development assistance. The Thursday order takes into its ambit all public sector companies, autonomous bodies and public-private partnership (PPP) projects receiving financial support from the government. State governments and their undertakings have also been directed to follow suit.
India and China have been locked in a months-long border stand-off, which resulted in a deadly clash last month that left 20 Indian soldiers dead. The two sides have lately failed to make a breakthrough in reducing the tensions despite intense negotiations at the military and diplomatic levels, and a disengagement process at some friction points has remained sluggish.
CA Vijay Kumar Gupta, former Central Council Member of the Institute of Chartered Accountants of India (ICAI) said: “The clarification has removed uncertainty about ongoing tenders. This will save significant time and prevent time and cost overrun.”