Bring back price preference

Vol 18, PW 6 (06 Nov 14) News in Brief

L&T, AFCONS, Essar and Punj Lloyd are among a raft of Indian companies preparing to battle the government’s October 1 directive to abolish the 30-year old ‘price preference’ policy that gave them a 10% price advantage over foreign companies in EPC and drilling tenders by state-owned firms.

Punj launched the campaign on November 3 with a letter to the oil ministry arguing countries worldwide offer incentives to local industries. L&T, AFCONS and Essar are likely to follow with similar letters calling for the policy to be re-introduced after it was abolished under pressure from ONGC.

“We think the government should take (Prime Minister) Modi’s ‘Make in India’ slogan more seriously instead of taking such retrograde decisions,” says a source. “In any case price preference was misleading.

Foreign companies would select an Indian partner to bid in ONGC tenders and then take all the major decisions outside India because the local partner had little experience. They would do hardly any work in India.