National Public Procurement Policy of India Project Advisory Committee Meeting 17th September 2013 09-11-2019

Project Overview Goal To develop a national public procurement policy Need for Procurement Policy To allow for efficacious expenditure of approximately US$ 536 billion Rationale Governments around the world utilise procurement to: stimulate local manufacturing capacities and employment; promote competition in the marketplace; adhere to good fiscal practices; promote sustainable production and consumption practices Time Frame August 2013 – March 2015 09-11-2019

Objectives To develop a procurement policy with two objectives: Judicious use of public expenditure Achievement of socio-economic developmental goals To study interfaces between macroeconomic policies and procurement so as to: allow policy-makers to react to changes in macroeconomic indicators calibrate public expenditure to balance conflicting objectives Inclusion of socio-economic objectives such as enhancing participation of SMEs moving to green procurement and sustainable procurement mechanisms to benefit disadvantaged classes 09-11-2019

Instances of Interfaces with procurement Country Competition policy Manufacturing/Innovation Fiscal Trade Sustainable Procurement Decentralised Procurement Social Issues/ SMEs US ✓ n/a EU UK Japan China South Africa Australia Canada Switzerland Sweden Brazil Mexico Malaysia Netherlands Belgium Germany France Denmark Note: Social Issues includes preferential procurement. 09-11-2019

Identifying Interfaces with Procurement: Major Macro-Economic Policies Competition Policy Manufacturing Policy Sustainable Procurement Fiscal Policy Trade Policy Procurement by State Governments The objective is to enable ‘policy bundling’ of the aforementioned macroeconomic policies with procurement. 09-11-2019

Identifying Interfaces with Procurement: Cross-cutting issues Ascertain the viability of balancing multiple objectives Socio-economic objectives Incentivising Small and Medium Enterprises Strategic sourcing Collaborative buying Public-private partnerships Post-contract management e-Procurement Eliminating corrupt practices in tendering 09-11-2019

Competition and Public Procurement Theoretical Base Types of procurement, optimal design of bidding for different requirements, OECD documents on anti-competitive practices in procurement Methodology Use literature review to identify common anti-competitive practices Undertake surveys to identify anti-competitive practices prevalent in India Identify best practices and adapt them for use in India Final Output A guidance document which allows procuring entities to identify prevalent anti-competitive practices 09-11-2019

Manufacturing and Public Procurement Theoretical Base Facilitating import substitution, encouraging innovation, using global value chains, supporting small scale industries Methodology Identify critical products in which India needs to build manufacturing capacity Frame a government procurement strategy which encourages moving up the value chain Final Output Formulate a methodology which does the following; Undertake a ‘spend analysis’ for ministries Identify products being procured maximum Identify local production capacity and potential to move up the value chain 09-11-2019

Fiscal Policy and Public Procurement Theoretical Base Efficacious Public Financial Management Effective use of fiscal policy to incentivise manufacturing Fiscal federalism and decentralisation Fiscal responsibility Methodology Determine the effectiveness of the operation of the Central and State Fiscal Responsibility legislations Critique flow of finances from Centre to State and Local Governments Final Output Identify and report cases where government expenditure should be calibrated with changes in fiscal and monetary policy Propose changes to Fiscal Responsibility legislations Fiscal policy (in tandem with public procurement to incentivise manufacturing in manufacturing clusters 09-11-2019

Trade Policy and Public Procurement Theoretical Base WTO GPA Chapter on Government Procurement in Free Trade Agreements Non Tariff Barriers maintained to limit market access opportunities Methodology Study the possible impact of the EU-India FTA Chapter on Government Procurement Evaluate current Foreign Trade Policy Final Output Suggest strategies to negotiate chapters on Government Procurement in FTAs Suggest alterations in the Foreign Trade Policy Coalesce Public Procurement with Trade Policy Theoretical Base Practices undertaken in other countries Methodology Final Output 09-11-2019

Procurement by State Governments and Local Entities Theoretical Base Examples of federal procurement policies (Queensland Public Procurement Policy, Jharkhand Public Procurement Policy (Draft) 2013 Degree of autonomy in public procurement by sub-federal entities (Canada, United States) Methodology Understand how effective decentralisation of procurement occurs Study the practice of formulating and implementing procurement policies by specific entities (Queensland Rail, San Mateo Country environmental purchasing policy) Final Output Provide a mechanism for decentralisation of public procurement priorities to different levels of procuring entities (State, Public Sector Utilities, Local bodies) 09-11-2019

Sustainable Procurement Theoretical Base Life cycle approach Using labelling to identify whether a product is ‘green’ or ‘sustainable’ Identification of specific sectors/products which are best suited for sustainable procurement Facilitating development of production capacity of sustainable products through the ‘spillover effect’ Methodology Undertake ‘needs assessment’ (for Central Government, State Governments Interviews/surveys will be conducted to determine if sustainable procurement of identified products can be cost-effective in India Final Output List of products/processes for which production capacity should be increased Methodology to assess the cost of procuring a product over its lifetime 09-11-2019

Issues for discussion Which of the following should be identified as independent case studies? Central Government Ministries and Departments Directorate General of Supplies and Disposal Centrally Planned Schemes Tenders documents in Specific Sectors Suggestions pertaining to data-repositories Individual Sector Studies Procurement of Food Procurement of Electronic Equipment Procurement of Civil Works Specific sources of data at a disaggregated product level 09-11-2019

Facilitating Effective Stakeholder Engagement Public Procurement Division, Department of Expenditure Central government departments/ministries (including PSUs and State government ministries) Industry Associations Regulatory Bodies Civil Society Organisation Foreign Industry Representations/ Companies Academia How do we facilitate consensus-building amongst the identified stakeholders for a National Public Procurement Policy of India? 09-11-2019

Thank You! 09-11-2019