Cabinet approves Procurement Quota to M/s. ITI in procurements made by BSNL, MTNL and BBNL

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal of Department of Telecommunications regarding continuation of reservation quota for M/s. ITI in procurements made by BSNL, MTNL and Bharat Broadband Network (BBNL). The approval consists of the following:

i. To continue the Reservation Quota policy for M/s. ITI Ltd. by reserving:

a. 30% of the procurement orders placed by BSNL, MTNL and BBNL for M/s. ITI for the products manufactured by it and for those outsourced items in which there is a minimum 5% value addition by M/s. ITI during 2016-17 and 8% value addition in 2017-18 and

b. 20% of the orders for the turn key projects [like GSM (Global System for Mobile Communication) network roll-out etc. of BSNL & MTNL and National Optical Fibres Network (NOFN) network roll-out, etc. of BBNL].

ii. ITI would accept orders under reservation quota only after the price is known and if the same is commercially viable.

iii. ITI shall exercise its option under Reservation Quota within 15 days of bid opening.

iv. The aforesaid policy measures shall remain in force for a period of two years with effect from the date of approval of CCEA and shall again be reviewed considering the financial health of ITI after the expiry of this period. However, it is mentioned that the Government has introduced Public Bill 2012 in Parliament, and under the provisions thereof, procuring entities, including CPSEs, would have to frame Rules for Public Procurement of Goods, Works and Services. Once such Public Procurement Rules for CPSEs are framed after the enactment of Public Procurement Act., the same would also be applicable to CPSEs under the administrative control of the Department of Telecommunications.

The extension of the benefit of:

i) 30% of the procurement orders placed by BSNL, MTNL and BBNL for M/s. ITI for the products manufactured by it and for those outsourced items in which there is a minimum 5% value addition by M/s. during 2016-17 and 8% value addition in 2017-18 and

ii) 20% of the orders for the turn key projects (like GSM network roll-out, etc. of BSNL & MTNL and NOFN network roll-out, etc. of BBNL) will ensure enough orders for ITI for the production activities. In today's highly competitive environment, it will be very difficult for ITI to survive on its own without the benefit of reservation quota which BSNL/MTNL has been extending for ITI for the last many years. Provision of reservation quota from BBNL will provide further boost to the order book of ITI and help in improving its financial health.

ITI will be beneficiary of the decision. It will also help in generating more employment opportunities in the Company particularly in the field of new telecom technologies.

Background:

CCEA in its meeting held in January, 2014 had extended the benefit of 30% reservation quota for ITI for a period of one year which has expired on 20.09.2014.

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