Image Source: CNBC TV18

The government has modified its procurement rules to promote Indian MSMEs in the backdrop of Prime Minister Narendra Modi’s address to the nation where he called for policies aimed at a 'Self Reliant India'. Rules have also been changed to provide relief to contractors and suppliers undertaking government projects who have been impacted by the nationwide lockdown and disruption of supply lines. Department of Expenditure has amended the General Financial Rules (GFR) as per which Government will not float any global tenders below Rs 200 crore. “No Global Tender Enquiry, however, shall be invited for tenders up to Rs 200 crore or such limit as may be prescribed by the Department Of Expenditure from time to time,” said a Department Of Expenditure notification released on May 15. As per current rules, a government department can launch a global tender inquiry if it feels that the goods required may not be available in India in required quantity and specifications. The notice says that the amendments to GFR rules have been carried out “in pursuance of Prime Minister’s address to the nation” where he called for promoting self-reliance and make in India to promote MSMEs. Government global tenders below Rs 200 crore will now be allowed to be floated only under exceptional cases after seeking prior permission. In another order released by the same department on May 13, the government has decided to return performance security to contractors and suppliers executing public-funded projects under certain conditions to give them liquidity relief. As per current rules, 5-10 percent of the contract value has to be deposited with the government as performance security, which is valid for 60 days beyond the contract completion date. Under these new conditions, the performance security will be returned if the contractor or the supplier invokes the Force Majeure Clause due to COVID-19 or if an application is made by a contractor who is not in default of any contractual obligations. In such cases, the performance security will be returned in proportion to contract work that has been completed. Department of Expenditure also clarified that government departments will not take any action against contractors, whose projects have been impacted by the nation-wide lockdown caused by the COVID-19 pandemic.