A Tender Issue

Already fighting with their backs against the wall, Indian PC manufacturers
are faced with the threat of losing out on one of their most lucrative segments–the
government. Ironically, Indian PC manufacturers have found that they are not
even eligible for Government contracts. After all, what could be more
discriminating than a tender asking ‘only MNC brands to apply’! There’s a
bias against Indian PC brands across the market with a marked preference for MNC
brands. But Indian PC manufacturers are as competent and their service levels
comparable to MNC vendors. As Raj Saraf, MD, Zenith Computers challenges,
“Look at the components of PCs bearing MNC as well as Indian brand names.
If you look inside, there will not be any difference. We all buy from the same
place be it Taiwan or anywhere else.”

In fact, way back in 1998, a committee under the aegis of MAIT was formed to
look into the issue of PSU purchases. Saraf was heading the committee but
nothing came of it. Today, Saraf says he is a disillusioned man and is not
looking at the government sector at all. (Market feedback however indicates that
Zenith has considerable presence in the Maharashtra government.)

Raj Saraf, MD, Zenith Computers

“Look at the components
of PCs bearing both MNC and Indian brand names. If you look inside, there will hardly
be any difference”

Domestic vendors are dissatisfied with the way MAIT handled the issue
alleging that it has not done enough for the cause. Responding to the
allegation, Vinnie Mehta, Executive Director MAIT says, “It is not an easy
problem. There is no government stipulation, which says that brands cannot be
mentioned in tenders. The problem gets compounded since there is no central
government agency for procurement. Each department makes the purchase on its own
so it’s a educating the officials concerned on the competence of Indian PC
brands is no mean task.” Mehta explains that whenever there are tenders
framed wrongly, MAIT addresses the situation on a case to case basis.
“There have been many cases where we have been successful in getting the
tenders rectified and ensured participation in the tendering process.”
Meanwhile, MAIT has roped in chief vigilance commissioner N Vittal to add muscle
to the cause. Vittal agrees that this blatant preference for MNC brands is not
good but adds that there is no government guideline regarding specification of

Vinnie Mehta, executive director, MAIT

“It’s not an easy issue to resolve. There’s no government stipulation which mandates that brands cannot be mentioned in tenders”

The response from various departments of the government on the issue of
procurement is that brands are mentioned in order to keep the flock of small
assemblers away from the bidding process. And since price is the determining
factor in tenders, small assemblers could very well walk off with orders.
Officials clarify that the credibility of Indian PC manufacturers is not suspect
and some Indian brands are certainly respectable. Vendors have offered a
solution to this. They have suggested that the government register vendors in
order to prevent small assemblers from bidding. Two of the biggest Indian
vendors in the government segment, HCL and Wipro, are said to be on the list of
most government departments.

Vendors like IBM and Compaq have tied up with various state governments to
implement e-governance solutions. Research firm Gartner had predicted that
government spending would help the sector recover to a large extent. It is no
wonder then that domestic vendors are gunning for the government. Players
traditionally focused in other market segments like the home and the small
businesses have now turned their eyes to this segment. Says Manish Agrawal,
Director (Operations), of Vintron Informatics Ltd, “We have no presence in
the government sector but are looking at that market now and specifying brands
is a matter of concern to us.”

And Agrawal puts it quite succinctly. “Specifying brands is actually
ludicrous since it negates the concept of bidding for a tender. It is better to
place an order with a vendor directly.”

Balaka Baruah Agarwal/CNS

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