Revised DPIIT Approval Process for Entities from Land Border Sharing Countries

This document elucidates the recent modifications to the DPIIT Approval process applicable to entities from countries sharing a land border with India. The Government of India, in its ongoing commitment to enhancing the integrity of public procurement processes, introduced consequential amendments to the General Financial Rules, 2017. These additional compliances were implemented in July 2020 through the issuance of the Department of Expenditure Order No. F.No. 6/18/2019-PPD dated 23-07-2020. Subsequent amendments ensued, culminating in a comprehensive reconfiguration on 23-02-2023 through Order (Public Procurement No. 4). As a corollary, the DPIIT revised the application formats for the registration of bidders from countries sharing a land border with India in April 2023.

The ensuing summary encapsulates the key alterations in the DPIIT Application process:

1. Covering Letter:

• Must enumerate the list of all requisite documents.
• The authorized signatory must be duly empowered for this specific purpose.

2. Appendix A:

• Introduction of a new element in row numbers 4 and 8 – Transfer of Technology (TOT).
• Bidders with TOT arrangements are required to furnish pertinent details.
• TOT, denoting Transfer of Technology, encompasses the dissemination and transfer of commercially utilizable knowledge facilitating independent performance of activities by the acquirer.

3. Appendix B:

• Applicable to manufacturers, excluding bidders.
• No substantive changes in this section.

4. Appendix C – Changes in TOT:

• Inclusion of requirements:
  1. Copy of Agreement with TOT entity to be attached.
  2. Financial details of TOT entity, including a net worth certificate from a Chartered Accountant (CA).
  3. Beneficial ownership details of the TOT Entity to be certified by a CA.

5. Appendix D:

• Seeks details of items for which registration is sought.
• Under row-7, necessitates the provision of details of the top 20 high-value outsourced components.

6. Appendix E:

• Introduction of Appendix F for security clearance of directors, management, and beneficial ownership (10%) of the bidder.

7. Appendix F:

• Seeks details of the board and management of the manufacturer and entity providing TOT for security clearance.

8. Appendix G:

• Requires bidders with TOT arrangements for sensitive sectors and sensitive technology to furnish details regarding the sectors for which registration is sought.
• Defines beneficial ownership as 25% controlling ownership interests, distinct from the 10% threshold for TOT entities.

Upon submission of the application, the Competent Authority will initiate the process by seeking political and security clearances from the Ministry of External Affairs and the Ministry of Home Affairs. State governments, where applicable, are delegated authority to evaluate and grant applications post the receipt of political and security clearances from the Government of India.

Additionally, the procurement of essential spare parts from Original Equipment Manufacturers will be exempt from DPIIT registration. This recent amendment introduces the concepts of TOT entities, sensitive sectors, sensitive technology, and other modifications, thereby rendering the registration process more rigorous.