The Union Ministry of Steel has brought in a few amendments in the policy for providing preference to domestically manufactured iron and steel products in government procurement (DMI&SP Policy), which came into effect first in 2017 and subsequently revised in 2019. The policy mandates to provide preference to locally manufactured iron and steel products with separate product-specific value addition in government procurement.
A crucial amendment to the DMI&SP Policy-Revised, 2019 is the inclusion of “Central Sector Schemes (CS)/Centrally Sponsored Schemes (CSS) for which procurement is made by states and local bodies, (which) would come within the purview of this Policy, if that project / scheme is fully / partly funded by Government of India”, as the Ministry of Steel notification dated 31 Dec’20 states.
The amendment, therefore, is greatly expanding the scope of the policy to include all Central government projects and other “non-project” related procurements.
Moreover, the policy shall be applicable to projects where the procurement value of iron and steel products is greater than INR 5 lakhs. The existing clause in the DMI&SP Policy-Revised, 2019 was that the policy was applicable for projects where the procurement value was greater than INR 25 crores.
Whereas DMI&SP Policy-Revised, 2019 mandated a minimum value requirement of 15% in government procurement, the new amendment has raised the minimum requirement ceiling to 20%. A revised appendix attached with the notification specifies the value addition bracket from a minimum of 20% to 50% for various products such as flat rolled alloy and non-alloy products, bars, tubes, pipes, wires, rails, angles, etc.
Domestic value addition, the notification clarifies, is the amount of “value added in India which shall be the total value of the item to be procured /sold (excluding domestic indirect taxes) minus the value of imported content in the item (including all customs duties) as a proportion of the total value of the item, in per cent”.
‘Make in India’
“The recent amendments are in consonance with the main thrust of the DMI&SP Policy, 2017,” Aruna Sharma, former Secretary, Ministry of Steel, told SteelMint. “The DMI&SP Policy, 2017 had as its primary focus steel pipes, as value addition for other steel products is considerably higher. The value addition in percentage terms can be increased by the Steel Ministry from time to time depending on the backend capability of the country. This is the basic principle of the policy.”
“The inclusion of all Central government projects broadens the scope of the policy that emphasises on promoting domestic value addition. This will include, for instance, the Prime Minister’s Awas Yojna scheme. The amendments are merely an extension of the DMI&SP Policy’s thrust on ‘Make in India’ with the percentage of value addition specified for each sector and product,” she said.
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