Problems relating to Trade and Investment on India

25. Government Procurement
Issue	Issue details	Requests	Reference

(1) Severe Local Contents Requirement in Government Procurement and Publicly Funded Projects	- GOI has decided to grant incentives for government procurement of specified products such as laptop PC and dot-printers locally manufactured in India. GOI requires the added value in India of more than 40% before GOI deems a product as originating from India, while the local content rate requirement increases by 5% in each year. Obviously, these measures place foreign funded enterprises (FFEs) in apparent inequality in competition against domestic manufacturers. Moreover, possible expansion of the scope of subject goods is another issue of concern to FFEs.	- It is requested that GOI repeals incentive measures it grants upon domestically manufactured goods in government procurement.	- Customers' Requirement - F.No.8(41)/2912-IPHW
	(Action) - On 10 February 2014, GOU has requested WTO dispute settlement consultations with GOI regarding India's solar photovoltaic domestic content requirements (DCR). In particular, the U.S. questions the statement in Phase I Batch II that projects must use domestically-made crystalline photovoltaic cells and modules (the major U.S. export products), which were not subject to GOI's Phase I Batch I.

(2) Lack of Information Concerning Government Procurement	- Information is scarce concerning the following issues: (1) Government procurement guidelines, and (2) Preferential measures in favour of domestic electronic products.	- It is requested that GOI confirms and provides the latest information on government procurement.
	(Action) - Information on GOI's implementing scheme concerning "Industrial Policy for Upgrading Electronics Industry" that GOI implements for enhancement by large margin the self-supply capacity of electronics products: (1) Ministry of Commerce and Industry (DoT) through Directorate General of Supplies and Disposals (DGS&D) works toward materialising 'preferential market access' Policy, mandating a phased increase in procurement from domestic electronics products. (2) While government procurement is executed directly by each bureau in concern, DGS&D performs as its 'nodal function', promoting the preferential measures on domestically manufactured electronics, pursuant to policy notifications given by DeitY, DoT, etc. (3) All items of notifications, promulgated for implementing preferential measures upon domestically manufactured electronics relative to government procurement, are subject to procedures set forth by DGS&D (Notification of 10 February 2012). - On 24 June 2016, the WTO panel found in support of the United States: "The claims brought by the United States ... Domestic content requirements (DCR measures), discriminating imported solar cells and modules, imposed by India in the... Ongoing national solar mission...are inconsistent with both Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs agreement".

<<BACK