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Price Preference

Price Preference. Indegenous vs Imported. Upto 15% within purchase powers Upto 25% with the approval of COS, firm not able to compete due to Low duty structure Small turnover High RM costs. Indegenous vs Imported. > 25% with GM’s approval Unfair competition Special development (1987)

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Price Preference

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  1. Price Preference

  2. Indegenous vs Imported • Upto 15% within purchase powers • Upto 25% with the approval of COS, firm not able to compete due to • Low duty structure • Small turnover • High RM costs

  3. Indegenous vs Imported • > 25% with GM’s approval • Unfair competition • Special development (1987) • Comparison • FOR place of manufacture • FOR port of Entry (1962)

  4. Indegenous vs Imported • Each case on merits, with Finance • Approval of next higher authority reqd where indigenous offer, higher in price, is being ignored. • COS review & report to Rly Bd • Price preference > 50%

  5. Ex-stock Imported vs Imports Imports subject to Import Assistance • Upto 15% within purchase powers • Upto 25% with the approval of COS • > 25% to be referred to Rly Bd • > 25%, in emergencies, GM’s approval, Rly Bd sanction not required • All cases, with Finance concurrence

  6. Ex-stock Imported vs Imports • No price preference should be given for imported stores not requiring import assistance over one requiring import assistance. • Import Assistance • Licence • Forex • L/C (1978)

  7. Ex-stock Imported vs Imports • Price Preference given to domestic suppliers over the duty paid price of import withdrawn in August 1995 • This Price Preference is not applicable to contracts financed by IDA

  8. SSI Industries • Group I Items to be procured only from large scale units • Group II Items to be procured only from large scale units, but possible to sub-contract to ancillaries 7 components to SSI units • Group III Items to be procured from large scale units & SSI units • Group IV409Items to be procured only from SSI • Group V 13Items procured from SSI upto 75% • Group VI 26 Items procured from SSI upto 50%

  9. SSI Industries Examples of Group IV Items (total 409) Agri Implements Bags Bandage cloth Barbed wire Battery charger Bench vices Bolts & Nuts Boots & Shoes Brooms Brushes Buckets Ceiling rose Circlips Coir rope Distbn Bd 15A Glue Hand lamps Helmets Hinges Hyd Jacks<30T Manhole cover

  10. SSI Industries • Recognized by NSIC • Max price preference 15% Grp III Items • Vis-à-vis large scale Indl units • In consultation with Finance • 1998

  11. SSI Industries • Tender documents free of cost • EMD waived • SD waived upto Monetary limit for which the unit is registered

  12. KVIC / Women’s Dev Corp • Price preference of max 15% vis-à-vis large private sector units (1989) • Price preference of max 5% vis-à-vis public sector units (1989)

  13. Earlier Delivery • Time Preference clause • The offer has been accepted in preference to the lowest acceptable offer of M/s……… at Rs…. with delivery period of …. and in the event of failure of supply as quoted the supply will be subject to acceptance at the lowest acceptable rate received against the tender. (1960) • Incorporate the clause in the Enquiry & get the acceptance of the firm. (1961)

  14. Public Sector Enterprises In view of • Liberalized industrial policy • Emphasis on performance improvement of PSEs • Reduction in levels of protection Switch from Price Preference to Purchase Preference (1992)

  15. Public Sector Enterprises • Quoted price of PSE not within 10% of the lowest valid bid price – bid rejected • Quoted price of PSE within 10% of the lowest price, other things being equal, – purchase preference at lowest valid bid price

  16. Public Sector Enterprises • Issued in 1992 • Extended in 1997 for 3 years upto 31.3.2000, for manufactured items produced by PSEs, or JVs with PSEs with a min value added content of >20% by the PSE, subject to purchase being > Rs 5 crores

  17. Public Sector Enterprises Purchase Preference covers • Products & Services • Works contracts • PSUs & JVs of PSUs (1998) • Applicable to Companies with >= 51% Central Govt equity (1972)

  18. Public Sector Enterprises • Only to Central Govt PSEs (1994) • Special Condition to be incorporated in the tender • The purchaser reserves the option to give a purchase preference to the offers from public sector units & SSI units over those from other firms, in accordance with the policies of the GOI, fro time to time. The price preference cannot be taken for granted and every endeavour need be made by them to be competitive.

  19. Public Sector Enterprises Purchase Preference • Extended upto 31.3.2002 • Min value of purchase Rs 1 crore • Products & Services • Central Govt PSEs • Clause to be specified in NIT • Penalties for cost over-runs (2000)

  20. Questions ???

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