Applying for Government Tenders and Projects in India - Process and Compliance

Applying for Government Tenders and Projects in India - Process and Compliance . India has been yet again called the “bright spot” of the world economy by the IMF this year. With consistent growth rates, coupled with large scale government projects, the opportunities are immense for local and foreign players. In this two part post, Compliance Calendar demystifies the process of applying for government tenders and projects in India. The first part of this article deals with general policy on public procurement, and the procedure for startups, small and medium companies (SMEs) and local Indian suppliers. The second part of this article is focussed on compliance for foreign players applying for tenders in India and the regulatory aspects of bidding and its procedure.  
Part I : Public procurement in India - Laws and Regulations and Preferential Policies for Startups in India 
The increasing push for liberalization and digitisation in India  
In the last few years, successive governments in India have liberalized various sectors including space technology, news and media, energy etc. This has led to easing investment caps, boosted the entry of foreign players in India and opened previously restricted industrial segments to small and large players from other countries, creating greater opportunities for startups and emerging companies. 
How public procurement can benefit your start-up? 
Public procurement by way of government tenders can be a useful opportunity for emerging start-ups that have not yet gained enough traction in the private sector. It offers a unique approach to getting market entry. The government is also trying to boost procurements from micro, small and medium enterprises.
For this reason, the government has barred global tenders where the amount of tender is less than 200 crores, with the health infrastructure tenders being the only exception. This is because start-ups are more agile, flexible, and may provide cheaper, more innovative products and services.
Definition of startup, as per DPIIT and as understood in the e-procure policy documents:

Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India

Turnover must not exceed 100 crores

Entity must work towards innovation, development, improvement of products or services or a scalable business with a high potential for employment generation.

It should not have been formed by splitting up or reconstructing an existing business

A startup so identified under the above clauses shall be required to obtain and submit along with his bid, a certificate of an eligible Start-up from the Inter-Ministerial Board of Certification to obtain support.

Policy and Regulatory Framework for Public Procurement 
India, not being a signatory to the World Trade Organisation’s Agreement on Government Procurement, follows its own national laws for public procurement.

The General Financial Rules, 2017 are the basic procurement framework in India. It contains administrative rules, directives on financial management and the procedure that the government follows for specific procurement of goods, services, and contract management. These rules apply only to the procurement initiated by Central Government Ministries, departments, and associated Central Public Sector Enterprises. For procurement processes by state governments, it's best to check with the state’s procuring rules.

The Delegation of Financial Power Rules, 1978 delegates the government's financial power to ministries and subordinate authorities, which are ultimately responsible for ensuring that the procurement process is efficient, economical, transparent, and fair.

The Public Procurement (Preference to Make in India) Order, 2017 seeks to promote local production of goods and services in India. It stipulated conditions that grant purchase preference to local suppliers if they match the winning bid of a foreign supplier within a certain margin above the lowest bid price.

GeM - Government e-Marketplace for startups 
The Government e Marketplace (GeM) is an online procurement platform for government ministries and departments, and the most widely used channel for public procurement in India.  MSMEs, DPIIT-recognised startups and other private companies can register on GeM as sellers and sell their products and services directly to government entities.
Beneficial policies of the government giving preference to startups in the bidding process 
The following categories of startups and local suppliers get preferential treatment in the short listing and selection process for award of tender:

Class I Local Suppliers under Public Procurement (Preference to Make in India) Order 2017 of Department for Promotion of Industry and Internal Trade, (DPIIT - Public Procurement Section). 'Class-I local Supplier' refers to a supplier whose local content is equal to or more than that prescribed in Tender Information Summary or 50%, if not prescribed.

Bidders from Micro and/ or Small Enterprises (MSEs)under Public Procurement Policy for the Micro and Small Enterprises (MSEs) Order, 2012

Start-ups Bidders under Ministry of Finance, Department of Expenditure, Public Procurement Division OM No F.20\212014-PPD dated 25.07.2016

Benefits for startups in registered on the GeM Portal for Bidding in Government Tenders:

Exemptions - Startups are exempted from otherwise stringent selection criteria, such as prior experience, prior turnover, and earnest money deposits in applying for tender process.

Exclusivity - The recognised startups that are registered with DPIIT are distinguished from other sellers as they are provided the “Startup India badge” that often gives them preferential position in selection in the bidding process.

Feedback loop - Startups registering and supplying services or products to the government e-marketplace can receive ratings on their products. This feedback can help in adapting and improving the product or services.

For the following categories of medium and small enterprises, a higher degree of preferential access is available:

Proprietor be SC/ ST or women in proprietary medium and small enterprises.

At least 51% shares held by an SC/ST or women partners or women promoters in partnership style or private company form of medium and small businesses.

Medium and small companies are exempted from payment of earnest money.

Preferential purchasing in case medium and small companies are participants in the tender - The procuring entity has the option to reserve its purchase preference to Medium and small companies. L1 is the lowest price offered. If a small or medium company as a bidder quotes a price within the band of the lowest (L-1) +15 %, where the L-1 price is quoted by someone other than such small/medium companies, then the  small/medium company as a bidder is eligible for being awarded up to 25 percent of the total quantity being procured, if they agree to match the L-1 price.

Registering on the CPPP - Central Public Procurement Portal (CPPP) 
Central Public Procurement Portal (CPPP) is a single point access to procurement processes and information published by various Ministries and Departments. This portal by the Government of India connects various Central Governments Departments, Organizations, Autonomous Bodies, and CPSEs, where they publish their tender inquiries, contract award details and their corrigenda.
E-procure website : The website https://eprocure.gov.in/cppp/ is maintained by GeM and CPPP, and enlists tenders open for application alongside their sectoral category, last dates and bids. Running a simple search on this portal can yield lots of opportunities to apply. Powered by Digital India, the app version of this website is also available for easy access on mobile phones. 
GeM Startup Runway : In addition to procurement benefits, the GeM Startup Runway is an initiative launched by GeM, to allow startups to reach out to a large cohort of government buyers by offering innovative products that are unique in design, process and functionality.
Navigating the process of filing for a tender in India 
Notice Inviting Tender - A notice for inviting a tender is published by the procuring entity, and contains a reference number and other details. The tender document is published on the portal of the inviting entity and must be downloaded by the bidder. The bid opening and closing dates would also be specified. 
Eligibility criteria 
Unless otherwise specified, the bidder should be a natural person, private entity or public entity. In certain cases, the bid is open to a joint venture or association of companies. They also also not be insolvent, and not be banned or blacklisted by the Procuring Organisation in its tendering process. 
For bids involving local supply requirements, the specific guidelines have to be adhered to. In addition, bids from companies located in specified countries sharing land borders with India must adhere to the conditions specified. 
Pre-bid conference 
A pre bidding conference may be organized for clarification of technical specifications and commercial conditions of the tender. The government may also have a purchase preference policy to support Make in India, MSME, start-ups and clarifications regarding this may be obtained during the pre-bid conference. 
Tender Information Summary 
The Tender Information Summary contains details of the title, bidding system, procuring entity, and their address and other such details. It also details the requirement of details such as the basis of evaluation, inspection, quantity, units, HSN code, terms of delivery and completion of the date of delivery.
This also contains the threshold of participation and preference under the Make in India policy. It may classify local suppliers based on percentage of the minimum local content used.
Compliance Requirements

The bid may specify compliance with environmental norms, technical specifications, classifications, international certifications and warranty obligations.

Udhayam Registration certificate and Registration number may be required

Pricing of goods - The price quoted by the Bidder shall not be higher than the controlled price fixed by law for the Goods, (Maximum Retail Price). In case the price quoted is higher than the controlled price, the bidder must specifically mention this fact and give reasons for coating a higher price. Any statement in this regard may make the contract terminable in addition to actions for violation of code of integrity.

Price components to be specified:

Break up of price is based on origin of goods.

Domestic goods offered indigenously where the price is separated by showing ex factory, ex-showroom, ex-warehouse and taxes and duties like GST, customs, duties, paid or payable on the components.

For foreign goods offered from abroad, the price of goods quoted FAS/FOB, port of shipment or CIF port of entry in India, amount of customs duty, charges for inland transportation, charges for incidental works of services, as per the INCOTERMS published by International Chamber of Commerce, Paris.

All builders must mention their tax structures, rates as per GST act. They must be registered under GST and furnish their GST number and GST registration certificate, unless specifically exempted.

The bidders should also quote the exact HSN code for their goods in the tender document.

Part II - Compliance for Foreign Companies Applying for tenders in India and the Procedures of Bid Selection 
Regulatory restrictions for foreign companies from land-bordering countries in participating in public procurement process 
The Government of India amended the General Financial Rules 2017 to enable imposition of restrictions on bidders from countries which share a land border with India on the grounds of national security and defense. These rules allow the Indian government to exclude or impose conditions on bidders from certain countries. 
Registration with Registration Committee appointed by DPIIT 
Any bidder from countries sharing land border with India will be eligible for bidding in public procurement of goods, services, or works, only if the bidder is registered with the DPIIT-appointed Registration Committee. A certificate in this regard is needed. 
In Bids for Turnkey contracts, including Works contracts, the successful bidder shall not be allowed to sub-contract works to any contractor from such Restricted Countries unless such contractor is similarly registered.
The definitional aspects of the term “Bidders” 
The laws in India follow an expansive definition of the word Bidders, and this is defined as :

An entity incorporated, established, or registered in such a country; or

A subsidiary of an entity incorporated, established, or registered in such a country; or

An entity substantially controlled through entities incorporated, established, or registered in such a country; or

An entity whose beneficial owner is situated in such a country; or

An Indian (or other) agent of such an entity; or

A natural person who is a citizen of such a country; or

A consortium/ joint venture where any member falls under any of the above

General guidelines on public procurement process in India:

The supply bids are invited with details of precise specifications.

Pre-qualification criteria for bidders are prescribed.

The lowest bidder, which is known as L1 in India, in most cases is awarded the final contract.

Re-tendering process may take place, if only one bid is received.

The government procurement process in India is subject to auditing and vigilance.

Compliance Requirements for Indian Agents and Associates of Foreign Principals 
Due to complexities in following up and fulfilling duties under contract in India, foreign companies often prefer to appoint an Indian agent acting on their behalf. The declarations needed to be filed in this regard are :

Name an address of the foreign principles, their nationality and status.

Letter of authority of the principal authorizing the agent to make an offer in India.

Self attested document evidence by the agent or associates about their identity, business details.

The bidder or the foreign principal must commit to submitting the agreement with agent, including commission and remuneration, after the financial bid opening.

A confirmation is also required on behalf of the Foreign Principals that the commission reserved for Indian agents or associates in the quoted price shall be paid by the procuring entity in India in Indian rupees on satisfactory completion of the project.

Eligibility conditions based on reciprocity 
Certain tender documents in India may stipulate that entities where Indian companies are not allowed to participate in the government, procurements shall also not be allowed to participate in the government tender process in India on a reciprocal basis.
Cost of bidding and Acquaintance with local conditions and factors 
All direct or consequential costs, losses and expenditures relating to the preparation, submission and processing of bids should be borne by the bidder. 
The Bidder, at his own cost, responsibility, and risk, is encouraged to visit, examine, and familiarize himself with all the site/ local conditions and factors.The Bidder acknowledges that before the submission of the bid, he has, after a complete and careful examination, made an independent evaluation of the Site/ local conditions, the legal, environmental, infrastructure, logistics, communications and any other conditions or factors of which would have any effect on the price to be quoted by him or affecting performance/ completion of the contract.
Thresholds of local content requirements for foreign entities 
The tender document shall declare the following requirements, which must be adhered to

Minimum local content for Contractor Classification: local content percentage prescribed to qualify as Class-I or Class-II local Suppliers for various products

Minimum local content for eligibility to participate: Minimum local content percentage prescribed for eligibility for a bid to be considered.

The margin of purchase preference:The bid price quoted by Class-I Local Supplier should be within this percentage from the L-1 price quoted by Non-local or Class-II bidders for being eligible for purchase preference.

Submission of bids on the portal

Manual bids are no longer submitted, and all bids must only be submitted online. Bidder should also not change any contents of the documents while uploading.

Regarding the protected Price Schedule (excel format, Cover-2), Bidder shall write his name in the space provided in the specified location only. Bidder shall type rates in the figure only in the rate column of respective item(s) without any blank cell or Zero values in the rate column, without any alteration/ deletion/ modification of other portions of the excel sheet.If space is inadequate, Bidder may upload additional documents under "Additional Documents" in the "bid Cover Content."

The date and time of the e-Procurement server clock, which is also displayed on the dashboard of the bidders, shall be taken as the reference time for deciding the closing time of bid submission.

All bids are automatically encrypted.

Manufacturing under license or technology collaboration agreements with foreign players for phased indigenisation 
Foreign companies can collaborate with an Indian company to participate in tenders. In such cases, the procuring entity has the right to grant exemption from meeting local content requirements, if manufacturing of a product developed abroad under license, is done indigenously, through a technology collaboration or technology transfer agreement, with phased increase in local content. 
Global Tender Enquiry and International Competitive Bidding 
If stipulated in the tender information that bids are invited for a Global Tender Enquiry, the following additional aspects apply -

While bid price may be in foreign currency, the expenditure in India must be stated in Indian rupees

All bids must be converted into Indian rupees based on the “bill for collection selling” exchange rate.

The bidders are to quote prices based on FOB, FAS, CIF, or DDP basis as stipulated in the Tender Document.

Evaluation of bids 
Once all bids are received, the procuring entity examines them. The conformity to technical specifications, quality assurance, commercial and other clauses is established. Financial bids of all the techno-commercially suitable bids are ranked, to determine the lowest price bidder. 
Procedure of Bid Selection in Awarding the Final Contract

Among all qualified bids, the lowest bid shall be termed as L1.

Goods and works where quantity to be purchased is divisible

If L1 is the class one local supplier, the contract for full quantity is awarded to L1.

If the L1 bid is not by a Class-I local supplier, then 50% of the order quantity is awarded to L1.

For the remaining 50% quantity, the lowest bidder among the Class-1 local suppliers whose quoted price falls within the purchase preference margin is invited to match the L1 price. In case this bidder fails to match the price of the L1, the next higher Class-1 local supplier is approached.

Goods and works where goods are not divisible

Among all qualified bids, the lowest bid shall be termed as L-1. If L-1 is 'Class-I local Supplier', the contract shall be awarded to L-1. In case the L1 is not the Class-I local supplier, the lowest bidder among the Class-I local suppliers is invited to match the L1 price.

Selection of successful bidders 
The procuring entity awards the contract to a bidder whose bid is techno-commercially suitable and price bid is the lowest and reasonable. The next steps in the process are as follows:

Verification of original documents before issuing a letter of award.

The official notification of the award of contract is called the Letter of Award, it contains legal information of the contract, price details etc. At this stage, it is mandatory for the successful bidder to be registered on the GeM portal and obtain a unique GeM seller ID.

Within 14 days of the receipt of the Letter of Award, performance security is required to be submitted.

A formal contract is signed within 7 working days of receiving the performance security. The name and address of the successful bid receiving the contract is also published on the portal and website of the procuring entity.

Penalties for failure to adhere to the procurement process guidelines 
Vendors who supply goods, services or works to the Indian government in breach of procurement conditions could result in the tender award being challenged or disqualified and the contract rescinded. It may also lead to the vendor being blacklisted for up to 3 years.

India has been yet again called the “bright spot” of the world economy by the IMF this year. With consistent growth rates, coupled with large scale government projects, the opportunities are immense for local and foreign players. In this two part post, Compliance Calendar demystifies the process of applying for government tenders and projects in India. The first part of this article deals with general policy on public procurement, and the procedure for startups, small and medium companies (SMEs) and local Indian suppliers. The second part of this article is focussed on compliance for foreign players applying for tenders in India and the regulatory aspects of bidding and its procedure.

Part I : Public procurement in India - Laws and Regulations and Preferential Policies for Startups in India

The increasing push for liberalization and digitisation in India

In the last few years, successive governments in India have liberalized various sectors including space technology, news and media, energy etc. This has led to easing investment caps, boosted the entry of foreign players in India and opened previously restricted industrial segments to small and large players from other countries, creating greater opportunities for startups and emerging companies.

How public procurement can benefit your start-up?

Public procurement by way of government tenders can be a useful opportunity for emerging start-ups that have not yet gained enough traction in the private sector. It offers a unique approach to getting market entry. The government is also trying to boost procurements from micro, small and medium enterprises.

For this reason, the government has barred global tenders where the amount of tender is less than 200 crores, with the health infrastructure tenders being the only exception. This is because start-ups are more agile, flexible, and may provide cheaper, more innovative products and services.

Definition of startup, as per DPIIT and as understood in the e-procure policy documents:

Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India
Turnover must not exceed 100 crores
Entity must work towards innovation, development, improvement of products or services or a scalable business with a high potential for employment generation.
It should not have been formed by splitting up or reconstructing an existing business
A startup so identified under the above clauses shall be required to obtain and submit along with his bid, a certificate of an eligible Start-up from the Inter-Ministerial Board of Certification to obtain support.

Policy and Regulatory Framework for Public Procurement

India, not being a signatory to the World Trade Organisation’s Agreement on Government Procurement, follows its own national laws for public procurement.

The General Financial Rules, 2017 are the basic procurement framework in India. It contains administrative rules, directives on financial management and the procedure that the government follows for specific procurement of goods, services, and contract management. These rules apply only to the procurement initiated by Central Government Ministries, departments, and associated Central Public Sector Enterprises. For procurement processes by state governments, it's best to check with the state’s procuring rules.
The Delegation of Financial Power Rules, 1978 delegates the government's financial power to ministries and subordinate authorities, which are ultimately responsible for ensuring that the procurement process is efficient, economical, transparent, and fair.
The Public Procurement (Preference to Make in India) Order, 2017 seeks to promote local production of goods and services in India. It stipulated conditions that grant purchase preference to local suppliers if they match the winning bid of a foreign supplier within a certain margin above the lowest bid price.

GeM - Government e-Marketplace for startups

The Government e Marketplace (GeM) is an online procurement platform for government ministries and departments, and the most widely used channel for public procurement in India. MSMEs, DPIIT-recognised startups and other private companies can register on GeM as sellers and sell their products and services directly to government entities.

Beneficial policies of the government giving preference to startups in the bidding process

The following categories of startups and local suppliers get preferential treatment in the short listing and selection process for award of tender:

Class I Local Suppliers under Public Procurement (Preference to Make in India) Order 2017 of Department for Promotion of Industry and Internal Trade, (DPIIT - Public Procurement Section). 'Class-I local Supplier' refers to a supplier whose local content is equal to or more than that prescribed in Tender Information Summary or 50%, if not prescribed.
Bidders from Micro and/ or Small Enterprises (MSEs)under Public Procurement Policy for the Micro and Small Enterprises (MSEs) Order, 2012
Start-ups Bidders under Ministry of Finance, Department of Expenditure, Public Procurement Division OM No F.20\212014-PPD dated 25.07.2016

Benefits for startups in registered on the GeM Portal for Bidding in Government Tenders:

Exemptions - Startups are exempted from otherwise stringent selection criteria, such as prior experience, prior turnover, and earnest money deposits in applying for tender process.
Exclusivity - The recognised startups that are registered with DPIIT are distinguished from other sellers as they are provided the “Startup India badge” that often gives them preferential position in selection in the bidding process.
Feedback loop - Startups registering and supplying services or products to the government e-marketplace can receive ratings on their products. This feedback can help in adapting and improving the product or services.

For the following categories of medium and small enterprises, a higher degree of preferential access is available:

Proprietor be SC/ ST or women in proprietary medium and small enterprises.
At least 51% shares held by an SC/ST or women partners or women promoters in partnership style or private company form of medium and small businesses.

Medium and small companies are exempted from payment of earnest money.
Preferential purchasing in case medium and small companies are participants in the tender - The procuring entity has the option to reserve its purchase preference to Medium and small companies. L1 is the lowest price offered. If a small or medium company as a bidder quotes a price within the band of the lowest (L-1) +15 %, where the L-1 price is quoted by someone other than such small/medium companies, then the small/medium company as a bidder is eligible for being awarded up to 25 percent of the total quantity being procured, if they agree to match the L-1 price.

Registering on the CPPP - Central Public Procurement Portal (CPPP)

Central Public Procurement Portal (CPPP) is a single point access to procurement processes and information published by various Ministries and Departments. This portal by the Government of India connects various Central Governments Departments, Organizations, Autonomous Bodies, and CPSEs, where they publish their tender inquiries, contract award details and their corrigenda.

E-procure website : The website https://eprocure.gov.in/cppp/ is maintained by GeM and CPPP, and enlists tenders open for application alongside their sectoral category, last dates and bids. Running a simple search on this portal can yield lots of opportunities to apply. Powered by Digital India, the app version of this website is also available for easy access on mobile phones.

GeM Startup Runway : In addition to procurement benefits, the GeM Startup Runway is an initiative launched by GeM, to allow startups to reach out to a large cohort of government buyers by offering innovative products that are unique in design, process and functionality.

Navigating the process of filing for a tender in India

Notice Inviting Tender - A notice for inviting a tender is published by the procuring entity, and contains a reference number and other details. The tender document is published on the portal of the inviting entity and must be downloaded by the bidder. The bid opening and closing dates would also be specified.

Eligibility criteria

Unless otherwise specified, the bidder should be a natural person, private entity or public entity. In certain cases, the bid is open to a joint venture or association of companies. They also also not be insolvent, and not be banned or blacklisted by the Procuring Organisation in its tendering process.

For bids involving local supply requirements, the specific guidelines have to be adhered to. In addition, bids from companies located in specified countries sharing land borders with India must adhere to the conditions specified.

Pre-bid conference

A pre bidding conference may be organized for clarification of technical specifications and commercial conditions of the tender. The government may also have a purchase preference policy to support Make in India, MSME, start-ups and clarifications regarding this may be obtained during the pre-bid conference.

Tender Information Summary

The Tender Information Summary contains details of the title, bidding system, procuring entity, and their address and other such details. It also details the requirement of details such as the basis of evaluation, inspection, quantity, units, HSN code, terms of delivery and completion of the date of delivery.

This also contains the threshold of participation and preference under the Make in India policy. It may classify local suppliers based on percentage of the minimum local content used.

Compliance Requirements

The bid may specify compliance with environmental norms, technical specifications, classifications, international certifications and warranty obligations.
Udhayam Registration certificate and Registration number may be required
Pricing of goods - The price quoted by the Bidder shall not be higher than the controlled price fixed by law for the Goods, (Maximum Retail Price). In case the price quoted is higher than the controlled price, the bidder must specifically mention this fact and give reasons for coating a higher price. Any statement in this regard may make the contract terminable in addition to actions for violation of code of integrity.

Price components to be specified:

Break up of price is based on origin of goods.
Domestic goods offered indigenously where the price is separated by showing ex factory, ex-showroom, ex-warehouse and taxes and duties like GST, customs, duties, paid or payable on the components.
For foreign goods offered from abroad, the price of goods quoted FAS/FOB, port of shipment or CIF port of entry in India, amount of customs duty, charges for inland transportation, charges for incidental works of services, as per the INCOTERMS published by International Chamber of Commerce, Paris.

All builders must mention their tax structures, rates as per GST act. They must be registered under GST and furnish their GST number and GST registration certificate, unless specifically exempted.
The bidders should also quote the exact HSN code for their goods in the tender document.

Part II - Compliance for Foreign Companies Applying for tenders in India and the Procedures of Bid Selection

Regulatory restrictions for foreign companies from land-bordering countries in participating in public procurement process

The Government of India amended the General Financial Rules 2017 to enable imposition of restrictions on bidders from countries which share a land border with India on the grounds of national security and defense. These rules allow the Indian government to exclude or impose conditions on bidders from certain countries.

Registration with Registration Committee appointed by DPIIT

Any bidder from countries sharing land border with India will be eligible for bidding in public procurement of goods, services, or works, only if the bidder is registered with the DPIIT-appointed Registration Committee. A certificate in this regard is needed.

In Bids for Turnkey contracts, including Works contracts, the successful bidder shall not be allowed to sub-contract works to any contractor from such Restricted Countries unless such contractor is similarly registered.

The definitional aspects of the term “Bidders”

The laws in India follow an expansive definition of the word Bidders, and this is defined as :

An entity incorporated, established, or registered in such a country; or
A subsidiary of an entity incorporated, established, or registered in such a country; or
An entity substantially controlled through entities incorporated, established, or registered in such a country; or
An entity whose beneficial owner is situated in such a country; or
An Indian (or other) agent of such an entity; or
A natural person who is a citizen of such a country; or
A consortium/ joint venture where any member falls under any of the above

General guidelines on public procurement process in India:

The supply bids are invited with details of precise specifications.
Pre-qualification criteria for bidders are prescribed.
The lowest bidder, which is known as L1 in India, in most cases is awarded the final contract.
Re-tendering process may take place, if only one bid is received.
The government procurement process in India is subject to auditing and vigilance.

Compliance Requirements for Indian Agents and Associates of Foreign Principals

Due to complexities in following up and fulfilling duties under contract in India, foreign companies often prefer to appoint an Indian agent acting on their behalf. The declarations needed to be filed in this regard are :

Name an address of the foreign principles, their nationality and status.
Letter of authority of the principal authorizing the agent to make an offer in India.
Self attested document evidence by the agent or associates about their identity, business details.
The bidder or the foreign principal must commit to submitting the agreement with agent, including commission and remuneration, after the financial bid opening.
A confirmation is also required on behalf of the Foreign Principals that the commission reserved for Indian agents or associates in the quoted price shall be paid by the procuring entity in India in Indian rupees on satisfactory completion of the project.

Eligibility conditions based on reciprocity

Certain tender documents in India may stipulate that entities where Indian companies are not allowed to participate in the government, procurements shall also not be allowed to participate in the government tender process in India on a reciprocal basis.

Cost of bidding and Acquaintance with local conditions and factors

All direct or consequential costs, losses and expenditures relating to the preparation, submission and processing of bids should be borne by the bidder.

The Bidder, at his own cost, responsibility, and risk, is encouraged to visit, examine, and familiarize himself with all the site/ local conditions and factors.The Bidder acknowledges that before the submission of the bid, he has, after a complete and careful examination, made an independent evaluation of the Site/ local conditions, the legal, environmental, infrastructure, logistics, communications and any other conditions or factors of which would have any effect on the price to be quoted by him or affecting performance/ completion of the contract.

Thresholds of local content requirements for foreign entities

The tender document shall declare the following requirements, which must be adhered to

Minimum local content for Contractor Classification: local content percentage prescribed to qualify as Class-I or Class-II local Suppliers for various products
Minimum local content for eligibility to participate: Minimum local content percentage prescribed for eligibility for a bid to be considered.
The margin of purchase preference:The bid price quoted by Class-I Local Supplier should be within this percentage from the L-1 price quoted by Non-local or Class-II bidders for being eligible for purchase preference.

Submission of bids on the portal

Manual bids are no longer submitted, and all bids must only be submitted online. Bidder should also not change any contents of the documents while uploading.
Regarding the protected Price Schedule (excel format, Cover-2), Bidder shall write his name in the space provided in the specified location only. Bidder shall type rates in the figure only in the rate column of respective item(s) without any blank cell or Zero values in the rate column, without any alteration/ deletion/ modification of other portions of the excel sheet.If space is inadequate, Bidder may upload additional documents under "Additional Documents" in the "bid Cover Content."
The date and time of the e-Procurement server clock, which is also displayed on the dashboard of the bidders, shall be taken as the reference time for deciding the closing time of bid submission.
All bids are automatically encrypted.

Manufacturing under license or technology collaboration agreements with foreign players for phased indigenisation

Foreign companies can collaborate with an Indian company to participate in tenders. In such cases, the procuring entity has the right to grant exemption from meeting local content requirements, if manufacturing of a product developed abroad under license, is done indigenously, through a technology collaboration or technology transfer agreement, with phased increase in local content.

Global Tender Enquiry and International Competitive Bidding

If stipulated in the tender information that bids are invited for a Global Tender Enquiry, the following additional aspects apply -

While bid price may be in foreign currency, the expenditure in India must be stated in Indian rupees
All bids must be converted into Indian rupees based on the “bill for collection selling” exchange rate.
The bidders are to quote prices based on FOB, FAS, CIF, or DDP basis as stipulated in the Tender Document.

Evaluation of bids

Once all bids are received, the procuring entity examines them. The conformity to technical specifications, quality assurance, commercial and other clauses is established. Financial bids of all the techno-commercially suitable bids are ranked, to determine the lowest price bidder.

Procedure of Bid Selection in Awarding the Final Contract

Among all qualified bids, the lowest bid shall be termed as L1.

Goods and works where quantity to be purchased is divisible

If L1 is the class one local supplier, the contract for full quantity is awarded to L1.
If the L1 bid is not by a Class-I local supplier, then 50% of the order quantity is awarded to L1.
For the remaining 50% quantity, the lowest bidder among the Class-1 local suppliers whose quoted price falls within the purchase preference margin is invited to match the L1 price. In case this bidder fails to match the price of the L1, the next higher Class-1 local supplier is approached.

Goods and works where goods are not divisible

Among all qualified bids, the lowest bid shall be termed as L-1. If L-1 is 'Class-I local Supplier', the contract shall be awarded to L-1. In case the L1 is not the Class-I local supplier, the lowest bidder among the Class-I local suppliers is invited to match the L1 price.

Selection of successful bidders

The procuring entity awards the contract to a bidder whose bid is techno-commercially suitable and price bid is the lowest and reasonable. The next steps in the process are as follows:

Verification of original documents before issuing a letter of award.
The official notification of the award of contract is called the Letter of Award, it contains legal information of the contract, price details etc. At this stage, it is mandatory for the successful bidder to be registered on the GeM portal and obtain a unique GeM seller ID.
Within 14 days of the receipt of the Letter of Award, performance security is required to be submitted.
A formal contract is signed within 7 working days of receiving the performance security. The name and address of the successful bid receiving the contract is also published on the portal and website of the procuring entity.

Penalties for failure to adhere to the procurement process guidelines

Vendors who supply goods, services or works to the Indian government in breach of procurement conditions could result in the tender award being challenged or disqualified and the contract rescinded. It may also lead to the vendor being blacklisted for up to 3 years.