2.1 The Government has, accordingly, laid down the following policy for providing preference to domestically manufactured electronic products, in procurement of those electronic products which have security implications for the country and in Government procurement for its own use and not with a view to commercial resale or with a view to use in the production of goods for commercial sale.

2.2.1 Electronic product or products having security implications and agencies deploying them will be notified by concerned Ministry/Department. The notified agencies will be required to procure the notified electronic product from a domestic manufacturer to the extent prescribed in this notification. When the electronic goods are specified by the concerned Ministries/Departments, rationale for such items being covered as essential security interest may also be clearly detailed. Listing of electronic goods as security sensitive can also be done by a designated authority notified for this purpose by the Ministry/Department concerned which may take a projectwise decision on which projects or project components are sensitive from the security angle.

2.2.2 In Government procurement, the policy will be applicable to all Ministries/Departments (except Defence) and their agencies for electronic products purchased for Governmental purposes and not with a view to commercial resale or with a view to use in the production of goods for commercial sale. Each Ministry/Department would notify the sector specific electronic product or products for which preference would be accorded to domestically manufactured electronic product or products. However, generic products, which are procured across sectors, such as computers, communication equipment etc., would be notified by the Department of Information Technology/Telecommunications, as the case may be.

2.2.3 The notification issued by each Ministry/Department for providing preference to domestically manufactured electronic product or products, either for reasons of security or for Government procurement, would specify the percentage of procurement to be made from domestically manufactured electronic product or products but it shall not be less than 30% of the total procurement value of that electronic product or products. Further each Ministry/Department would also specify the domestic value addition requirement which the electronic product should satisfy for the product to qualify as domestically manufactured electronic product. However, such specification should not be below the generic definition of domestically manufactured electronic products provided in Para 2.3 below.

2.2.4 The policy is also applicable to procurement of electronic hardware as a service from Managed Service Providers (MSPs).

2.3 Domestically Manufactured Electronic Products. The Domestically Manufactured Electronic Products are manufactured by companies that are registered and established in India and engaged in manufacture in India and would include Contract Manufacturers, but traders are excluded from the definition. These electronic products shall meet the following graded domestic value-addition in terms of Bill of Material (BOM) from domestic manufacturers.

#The formula for Value-Addition:

3. Eligibility. All companies registered in India and engaged in manufacture of electronic products in India are eligible for consideration under the policy.

4. Procurement. The procuring agencies shall follow their own procurement procedures, subject to meeting the requirement that specified percentage of procurement shall be of domestically manufactured electronic products.

4.1.2 Aggregation of annual requirements and such other procurement practices, which facilitate the implementation of this policy, may be adopted by procuring agencies.

4.2 Procurement by Government Ministry/Department or agencies under their administrative control.

4.2.1 Wherever the domestically manufactured electronic products are procured under this policy by a Government Ministry/Department or an agency thereof, such procurement shall be subject to matching of L1 price and on satisfying technical specifications of the tender.

4.2.2 For procurement by Government Ministries/Departments and agencies under their administrative control, the tender for procuring electronic products would normally specify that specified part of the procurement value would be awarded to the lowest technically qualified domestic manufacturer of electronic products, subject to matching with L1, if such bidders are available. The remaining will be awarded to L1, irrespective of whether he is a domestic manufacturer or not.

4.2.3 It is not necessary that each tender for the procurement of electronic product is split. If a tender cannot be split, either because the unit of procurement is small or because of technical reasons, or because no domestic manufacturer is available for the product, the procuring agency may ensure that the annual requirement of procuring the specified extent of electronic products from domestically manufactured products is achieved through suitable enhancements in other tenders.

4.2.4 The tender conditions would ensure that domestically manufactured electronic products are encouraged and are not subject to restrictive mandatory requirement of prior experience. However, procuring Department/agency may incorporate such stipulations as may be considered necessary to satisfy themselves of the production capability and product quality of the domestic manufacturer.

5.1 A suitable self-certification system would be devised to declare domestic value addition by the vendor. The system would also provide for checks by Standardization, Testing and Quality Certification (STQC) and other testing laboratories accredited by the Department of Information Technology. In cases of mis-declaration suitable penalties will be imposed. STQC would be strengthened for this purpose.

5.2 Each Ministry/Department shall annually obtain a declaration indicating the extent of compliance to the policy and reasons for non-compliance thereof from all procuring agencies under its administrative control.

5.3. Individual Departments/Ministries may provide for suitable incentives/disincentives for compliance under the policy.

6. Electronic products. In case of a question whether an item being procured is an electronic product to be covered under the proposed policy, the matter would be referred to the Department of Information Technology for clarification.

7. Time period. The policy will be valid for 10 years from the date of its notification in Official Gazette.

8. Guidelines. Detailed guidelines for operationalizing the proposed policy which would, inter alia, provide for modalities of self-certification by the vendor and the procuring agencies would be issued after the policy is notified. The relevant guidelines for procurement, in respect of the Government, Government PSUs and Government controlled institutions, would be issued with the concurrence of the Finance Ministry.

9. Some examples of typical procurement scenarios are illustrated in Appendix.

APPENDIX

SOME EXAMPLES OF TYPICAL PROCUREMENT SCENARIOS

1. Ministry of Communications and Information Technology (Deptt. of Information Technology), Noti. No. 8(78)/2010-1PHW, dated February 10, 2012, published in the Gazette of India, Extra., Part I, Section 1, dated 15th February, 2012, pp. 9-14, No. 44.