Price Preference

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Price Preference

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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

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Indegenous vs Imported

• gt 25 with GMs approval
• Unfair competition
• Special development (1987)
• Comparison
• FOR place of manufacture
• FOR port of Entry (1962)

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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 gt 50

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Ex-stock Imported vs Imports

• Imports subject to Import Assistance
• Upto 15 within purchase powers
• Upto 25 with the approval of COS
• gt 25 to be referred to Rly Bd
• gt 25, in emergencies, GMs approval, Rly Bd
  sanction not required
• All cases, with Finance concurrence

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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)

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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  the duty paid price of import withdrawn in August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 IV409 Items to be procured only from SSI
• Group V 13 Items procured from SSI upto 75
• Group VI 26 Items procured from SSI upto 50

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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 Jackslt30T Manhole cover

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SSI Industries

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

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SSI Industries

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

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KVIC / Womens 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)

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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)

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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)

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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

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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
• gt20 by the PSE, subject to purchase being gt Rs
  5 crores

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Public Sector Enterprises

• Purchase Preference covers
• Products Services
• Works contracts
• PSUs JVs of PSUs (1998)
• Applicable to Companies with gt 51 Central Govt
  equity (1972)

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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.

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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)

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Questions ???