Medicine Supplies and Make in India

• 09 Dec 2020

Why in News

Recently, the Ministry of Railways has written to the Department for Promotion of Industry and Internal Trade (DPIIT) seeking exemption for procuring certain medical items manufactured outside India, particularly medicines used in the treatment of Covid-19, cancer, etc.

• DPIIT is a central government department under the Ministry of Commerce and Industry.

Key Points

• Background:
  
  • In August 2020, Northern Railway formally wrote to the Railway Board, expressing difficulty in procuring drugs and surgical items in the light of the Make in India policy.
    
    • Indian Railways is one of the largest employers in the country with over 12 lakh employees and has its own network of healthcare infrastructure, including super speciality hospitals in all Zonal Headquarters.
  • It highlighted that certain drugs used in cancer treatment and the supplies of antiviral medicines and the vaccines for Covid-19 are manufactured outside India but available in the Indian market through agents or dealers, who may not fall under the Class-I or Class-II categories, which is required for purchases under the new Make in India guidelines.
    
    • The revised Public Procurement (Preference to Make in India), Order 2017 introduced a concept of Class-I, II and non-local suppliers, based on which they will get preference in government purchases of goods and services.
    • In June 2020, the government modified public procurement norms to give maximum preference to companies whose goods and services have 50% or more local content, a move aimed at promoting 'Make in India' and making the country self-reliant.
• Issue:
  
  • In the existing Make in India policy, there is no window available to procure such items from the suppliers who may not meet the Local Content Criteria required for Class-I and Class-II Local Supplier category.
    
    • Class-I is a local supplier or service provider whose goods, services or works offered for procurement have local content equal to or more than 50%.
    • Class-II is a supplier or service provider whose goods, services or works offered for procurement have a local content of more than 20% but less than 50%.
    • Only these two categories of suppliers shall be eligible to bid in the procurement of all goods, services or works and with an estimated value of purchases of less than Rs. 200 crores.
  • It is therefore proposed to seek an exemption to procure such medicines and medical items from Indian Market from ‘non-local suppliers’ (suppliers who supply local content of less than 20%).
  • However, the DPIIT informed that procurement of imported items through Indian agents/traders amounted to an indirect violation of the General Finance Rules, 2017 and hence, it was not recommended and advised to get specific relaxation for procurement of such medicines/medical equipment.
    
    • Rule 161 (iv) of GFR 2017 was amended by the Department of Expenditure in May 2020 order to restrict global tender enquiry for contracts worth more than Rs. 200 crore.
    • This was intended to enable floating of local tenders by procuring entities of the government to benefit local entities.
  • The purpose of seeking relaxation was to achieve indigenisation of the items that are presently not being manufactured in the country and the objective is defeated in case the subject relaxation is granted.
• The DPIIT has forwarded the issue to the Department of Pharmaceuticals and Ministry of Health and Family Welfare, which are the nodal agencies for Pharmaceuticals, Medical Devices and Equipment.
• The Ministry of Railways was advised to exercise the powers conferred under Para 14 of the Make in India policy guidelines with the approval of the Minister-in-charge to seek relaxation in any particular procurement, if required.
  
  • Para 14 empowers Ministries and various Departments to grant an exemption and to reduce minimum local content.

Source: TH