Keeping pace with indigenization – impact on Oil & Gas industry

Modi Government’s marquee Make in India and post COVID-19 Atmanirbhar campaign, which aims at self-reliance, are driving businesses to re-look at their operational strategy.

Some key policy changes announced recently are:

1. Mandatory approval of Reserve Bank of India for foreign investments by investors/beneficial owners from countries with whom India shares a land border
2. Mandatory registration with the Competent Authorities of bidders (from countries with whom India shares a land border) participating in contracts with Government entities
3. Revised Public Procurement policy (‘PPP’) dated 4 June 2020 to incentivise Indian value addition/ local content (‘LC’). This PPP appears to permit global tenders by Government entities only for contracts exceeding INR 200 crore (~US$26 million). It also provides for 20% purchase preference margin (‘PP’) based on LC. However, existing PPP dated 25 April 2017 for the Oil & Gas (‘O&G’) sector remains unchanged and continues to apply.
4. Change in eligibility criteria for classification as Medium, Micro and Small Enterprises (‘MSMEs’) and removal of distinction between manufacturing and service enterprises

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