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RESTRICTIONS ON PUBLIC PROCUREMENT FROM CERTAIN COUNTRIES

Focus: GS-III Indian Economy

Why in news?

The Government of India today amended the General Financial Rules 2017 to enable imposition of restrictions on bidders from countries which share a land border with India on grounds of defence of India, or matters directly or indirectly related thereto including national security.

Details

  • The Department of Expenditure has, under the said Rules, issued a detailed Order on public procurement to strengthen the defence of India and national security.
  • As per the Order any bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the Competent Authority.
  • The Competent Authority for registration will be the Registration Committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT).
  • Political and security clearance from the Ministries of External and Home Affairs respectively will be mandatory.
  • The Order takes into its ambit public sector banks and financial institutions, Autonomous Bodies, Central Public Sector Enterprises (CPSEs)and Public Private Partnership projects receiving financial support from the Government or its undertakings.

Role of State Governments

  • State Governments too play a vital role in national security and defence of India.
  • The Government of India has written to the Chief Secretaries of the State Governments invoking the provisions of Article 257 (1) of the Constitution of India for the implementation of this Order in procurement by State Governments and state undertakings etc.
  • For State Government procurement, the Competent Authority will be constituted by the states but political and security clearance will remain necessary.  

What are General Financial Rules (GFRs)?

  • The General Financial Rules (GFRs) are set of rules that deal with matters that involve public finances. They were first issued in 1947 bringing together all the existing orders. They are instructions that pertain to financial matters.
  • They lay down the general rules applicable to Ministries / Departments, and detailed instructions relating to procurement of goods are issued by the procuring departments broadly in conformity with the general rules, while maintaining flexibility to deal with varied situations.

Article 257 in The Constitution Of India

Control of the Union over States in certain cases

(1) The executive power of every State shall be so exercised as not to impede or prejudice the exercise of the executive power of the Union, and the executive power of the Union shall extend to the giving of such directions to a State as may appear to the Government of India to be necessary for that purpose.

  • In short, the Union Government can issue directions to the state Government even with regard to the subjects enumerated in the state list.
  • The Union Government can also give directions to the state with regard to construction and maintenance of the means of communication declared to be of national or military importance.
  • It can also ask the state Governments to construct and maintain means of communication as part of its functions with respect to naval, military and air force works.
  • It can also issue them necessary directions regarding the measures to be taken for the protection of the railways within the jurisdiction of the state.
  • It may be noted that the expenses incurred by the state Governments for the discharge of these functions have to be reimbursed by the Union Government.
  • It may be noted that the state Governments cannot ignore the directions of the Union Government, otherwise the president can take the plea that the Government of the state cannot be carried on the accordance with the provisions of the Constitution and impose President’s rule on the state.
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September 2022
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