Country of Origin On Government e-Marketplace

GOVERNANCE/ ECONOMY

Topic: General Studies 2:

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Country of Origin On Government e-Marketplace

Context: The government on 23 June 2020 made it mandatory for sellers on the Government e-Marketplace (GeM) portal to clarify the country of origin of their goods when registering new products.

What is GeM?

• GeM is a one-stop National Public Procurement Portal to facilitate online procurement of common use Goods & Services required by various Central and State Government Departments / Organizations /Public Sector Undertakings
• It was launched in 2016 to bring transparency and efficiency in the government buying process.
• It operates under the Ministry of Commerce and Industry.
• GeM is a completely paperless, cashless and system driven e-market place that enables procurement of common use goods and services with minimal human interface

What are the new guidelines?

• Sellers on the GeM portal will now have to disclose the origins of their products.
• The portal also has a ‘Make in India’ filter, and government offices will be able to know which products have a higher content of indigenously produced raw materials.
• This would help government agencies choose products that meet the ‘minimum 50 per cent local content’ criterion when selecting bidders for their tenders
• The GeM portal now allows buyers to reserve a bid for Class I local suppliers, or suppliers of those goods with more than 50 per cent local content.
• For bids below Rs 200 crore, only Class I and Class II (those with more than 20 per cent local content) are eligible.

Significance of the move

• The move is aimed at promoting India-made goods and in line with government’s push for self-reliance (Atmanirbhar Bharat Mission)
• Products sold on the GeM portal range from stationery used by government officials to medical products that are used on patients — and this might provide an opportunity to Indian manufacturers across industries to push their products in government facilities.
• It may over time filter out imported goods from use in government offices and facilities
• Weaponisation of trade ties in the wake of recent border tensions with China 
  • India wants to reduce its economic dependence on China so that China doesn’t use its economic might as a leverage against India during crisis times
  • At $ 70.32 billion in 2018-19 and $ 62.38 billion between April 2019 and February 2020, China accounts for the highest proportion of goods imported into India (around 14 per cent in 2019-2020 so far)

Critical Analysis of the move

• The GeM move on country of origin is at best symbolic.
• This may erode Indian industry’s global competitiveness by placing a premium on ‘Indianness’ over quality or cost.
• A more direct impact may be seen if the proposal to mandate the country of origin for products on private platforms is implemented.
• Attaining genuine self-reliance is a long and capital intensive process that would require far greater investment in education, skill-building and infrastructure.
• This may further escalate tension with China transcending the boundary misunderstanding into trade war which may not be in India’s interest. For Ex: India’s drug makers depend on China for nearly 70% of requirements of bulk drugs and intermediates.

Conclusion

• Enhancing manufacturing capacities with improved efficiency and reduced cost would require an overhaul of bureaucratic processes rather than mere tweaking of government procurement rules

Connecting the dots:

• Critical analysis of Atmanirbhar Bharat Mission and its financing