SITARA campaign to highlight exclusion of domestic companies from Public Procurement

We were the only Indian Do Tank to take the National Security angle while pointing out the danger posed to India’s cyber infrastructure from uncontrolled procurement of foreign, especially Chinese telecom equipment, in our ICT networks. At a meeting held with the NSCS in January 2019, the National and Economic Security dangers posed by foreign equipment in our ICT networks were discussed in detail. Government was apprised of China’s Information Warfare strategy which could be enabled by control of ICT networks. Predatory practices, corruption in the domestic procurement system, systematic exclusion of domestic companies, tricks employed by foreign companies to circumvent anti- dumping duties and underbid domestic tenders, a practice deployed around the world with State support, were described. We met dignitaries in many more Ministries to apprise them of the need to promote domestic companies.

We were also the first ones to warn Govt not to risk falling into the wrong camp in the wake of the US-China technology decoupling. US President Biden appears to be committed to enforcing the tech restrictions on China, the only aspect of the Technology and Trade War launched by the previous administration which has shown any signs of success.

The NSCS to their credit took the threat very seriously and subsequently informed us that our report had “lit a fire in Government circles.” A spate of positive procurement decisions in favour of domestic industry followed, which SITARA welcomed.

The contribution of public procurement to domestic GDP growth is almost incalculable, if one takes a historical perspective. As per the OECD, public procurement has a share of 12% of the GDP of the most advanced countries, and fully 29% of Government expenditure. Given the multiplicity of levels in India (Centre, State, central PSU’s including banks, state PSU’s, local govt including panchayat and municipal corporations etc.) through which public procurement takes place, it would be no exaggeration to posit that:

“Procurement will be around 33-40 percent of the total procurement in the country. By translation, this means that it is ~33-40% of the effective formal demand in India. This includes both goods (computers, TV’s, furniture etc) as well as services (consultants, logistics and transportation services, catering etc etc). Historically, the informal sector (particularly for services) has been 2x to 3x of the formal sector. But in areas of interest to SITARA (telecom, electronics, A&D etc), the formal sector is pretty much 70-80 percent of the total demand. Hence, the assumption that Public Procurement is ~33-40 percent of the total demand will not be out of place.” – Shri P.V.G. Menon, distinguished SITARA member and CEO, Electronics Skills Council.

In fact, we feel that corruption in public procurement over the decades has led to billions and even trillions of rupees bleeding out of the country, depriving the home country of value addition, jobs and high technology, while catalysing further development abroad. Particularly shocking was the preference shown to Chinese manufacturers over viable, high-tech, domestic telecom companies. There is a term for such people.

All that is set to end. Many machinations are still being employed to circumvent the positive domestic procurement orders, but an ever vigilant public must point out contraventions and ensure the guilty do not get away with this crime against the Nation and tenders are awarded to domestic companies. Only then will India grow and end the crushing poverty which just does not seem to abate as compared to other countries.

About The Author