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Public Procurement in a BRIC Economy: The Indian Experience

Public Procurement in a BRIC Economy: The Indian Experience. Public Procurement Law: International & Regional Perspectives International Public Procurement Law Day, Bangor University Dr Sangeeta Khorana 30 th March 2012. Outline Background and overview Case study: India

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Public Procurement in a BRIC Economy: The Indian Experience

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  1. Public Procurement in a BRIC Economy: The Indian Experience Public Procurement Law: International & Regional Perspectives International Public Procurement Law Day, Bangor University Dr Sangeeta Khorana 30th March 2012

  2. Outline • Background and overview • Case study: India • SWOT Analysis: India’s GPA Accession? • Conclusions and the way forward Bangor University Procurement Week 30March 2012

  3. Background Government procurement under the GATT/WTO Special provisions for developing countries: (Article V GPA) Price preference programs Art V: 3(a) Offsets Art V: 3(b) Phased-in addition of entities Art V: 3 (c) Higher thresholds Art V: 3 (d) Still lack of interest - increasing bilateral focus Persisting protectionism is also a cause for worry Bangor University Procurement Week 30March 2012

  4. Economic rationale • Improved market access • Enhanced domestic competition and international competitiveness • Lower costs from efficient tendering • Efficiency in public spending, knock-on economy-wide positive effects Bangor University Procurement Week 30March 2012

  5. Case study • India specific focus • GPA Observer status • Large and growing market, stable economic indicators • Growing value of central government procurements - 5% of GDP (2008-2009 prices) • Increasing public focus on corruption and general lack of transparency Bangor University Procurement Week 30March 2012

  6. Existing legal framework • Central government - General Financial Rules (2005, amended 1962), Delegation of FR 1978, manuals, DGS&D, supplementary rules by CVC • Aspects of UNCITRAL, World Bank, Best Practices, GPA • Constitution (Art 299), Contract Act 1872, Sale of Goods Act 1930 • Rules and application, procurement thresholds –different for states and ministries Bangor University Procurement Week 30March 2012

  7. Public procurement Indian Railways Central government State governments Procedure for tenders • Bids not invited value <$3,500 • Open and Ltd tendering value > $50,000 • Response time: • 3 weeks domestic bidders • 4 weeks foreign bidders Bids invited limited tenders for < $2,500 Open tender > $20,333 Response time: same as central government Bids invited through Open tender value > $101,163 Policy for preferential treatment Additional price preference allowed to SSI, PSEs and Cottage and Village Industries Clause for price preference Preferences allowed to SSI, PSEs and Cottage and Village industries Settlement of disputes DGS&D: review by the Standing Committee Appeals to Secretary (Industry), Disputes to State government officer

  8. Public procurement SWOT Analysis Indian Railways Central government State governments Procedure for tenders • Bids not invited value <$3,500 • Open and Ltd tendering value > $50,000 • Response time: • 3 weeks domestic bidders • 4 weeks foreign bidders Bids invited limited tenders for < $2,500 Open tender > $20,333 Response time: same as central government Bids invited through Open tender value > $101,163 Policy for preferential treatment Additional price preference allowed to SSI, PSEs and Cottage and Village Industries Clause for price preference Preferences allowed to SSI, PSEs and Cottage and Village industries Settlement of disputes DGS&D: review by the Standing Committee Appeals to Secretary (Industry), Disputes to State government officer

  9. Where is India with regards to Corruption? • Current state: • Prevention of Corruption Act, 2008 (amended 1998) • Money Laundering Act, 2002 • Right to Information Act, 2005 • Public Interest Disclosure Act, 2010 • But corruption is a major problem: CWG, 2G bandwidth spectrum licences, mining lease scams Bangor University Procurement Week 30March 2012

  10. Conclusions and way forward • Challenges and constraints outweigh benefits & opportunities • Political commitment to cleaner procurements • Next steps: • Comprehensive national framework • Strengthen redress and bid challenge • Identify critical and sensitive sectors • Enhance transparency, combat corruption, streamline tendering • For future GPA accession: • Technical assistance and capacity-building • Limit coverage commitments to central government entities • Selective sub-central entities phase-in Bangor University Procurement Week 30March 2012

  11. Thank you Bangor University Procurement Week 30March 2012

  12. GP market in India Bangor University Procurement Week 30March 2012

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