India’s DPIIT (Department for Promotion of Industry and Internal Trade), Ministry of Commerce, Government of India has issued a new registration format (Feb/Apr 2023) for any bidder whose ultimate owners are from a land-border country. In May 2023, DPIIT publicly stated that it “has revised the format of application” for public procurements involving such bidders. Going forward, firms must submit one hard-copy of their application to DPIIT and supply far more information. Notably, the updated rules now explicitly capture Transfer-of-Technology (ToT) links and designate sensitive sectors and technologies for extra screening. In short, any foreign-ownership or foreign-technology connection will require detailed DPIIT approval (i.e. Registration Committee having multi-ministerial representatives) before a bid is considered.
- Transfer of Technology (ToT) Arrangements: New rules require bidders to declare any ToT deal with a foreign entity. The revised Appendix C demands the signed ToT agreement and audited financials of the foreign “technology provider. If the ToT partner is different from the bidder, that manufacturer/contractor must be identified too. In practice, even using imported patented processes or designs can trigger registration.
- Revised Appendices: The application is now split into multiple annexures. For example, Appendix C (for non-bidder manufacturers) requires the ToT contract copy and a Chartered Accountant’s net-worth certificate of the foreign collaborator. Appendix D now asks for the 20 highest-value outsourced components. New Appendices E/F require detailed biographies (with passports/IDs) of all directors and owners of the bidder and its foreign partner. The expanded form forces bidders to map out their entire ownership chart and board of directors.
- Beneficial Ownership Thresholds: The DPIIT clarifies that a “beneficial owner” is anyone holding ≥25% equity or control. (Importantly, in ToT cases this threshold is only 10% of the foreign technology provider. In other words, any individual or entity with significant indirect or effective control must be listed. This double-standard underscores the scrutiny on ToT links.
- Enhanced Security Vetting: Each DPIIT application will now be vetted by India’s External Affairs and Home Ministries. Bidders must submit full names, passport details and nationalities of all directors (and even secondary owners). In effect, no bid is approved until the political/security clearance team signs off.
- Sensitive Sectors & Technologies: The update codifies which industries trigger extra scrutiny. Category-I sectors (nuclear, defence, space, etc.) and Category-II sectors (e.g. civil aviation, electronics, agriculture, etc.) are explicitly listed as “sensitive”. Bidders must flag any ToT that touches these fields. Likewise, certain “sensitive technologies” – additive manufacturing (3D printing), satellite/broadcast communications, programmable electronics or SCADA systems – must be declared under any ToT setup. In short, projects involving these strategic areas will face heightened review.
- Exemptions: The only general carve-out is for genuine OEM spare parts and related service contracts. DPIIT notes that procurement of spare parts or AMC/CMC from the original equipment manufacturer (or its authorized agent) is exempt from registration. (By contrast, buying whole machines or sensitive kits still needs DPIIT approval.)
Each of these changes represents new procedural rigor. Firms from China, Pakistan, Nepal, Bhutan, Bangladesh, Myanmar or Afghanistan – or any Indian bidder with ties to those countries – must build elaborate documentation. As DPIIT cautioned, the application format has been revised and all new bids must follow it Existing registrations under the old format are still being processed (no re-filing required), but every new bid needs the updated annexures and clearance.
Transfer of Technology (ToT) Now Triggers DPIIT Approval
DPIIT defines ToT very broadly: “dissemination and transfer of all forms of commercially usable knowledge such as know-how, skills, technical expertise, designs, processes and procedures, trade secrets, etc.”. In practical terms, any contract to use foreign-owned technology falls under this banner. The recent amendment makes it clear that even an Indian manufacturer that uses imported technology counts as having a cross-border interest. Therefore, the firm is treated like a “border-country bidder” for procurement rules.
In concrete terms, a bidder must now list the foreign entity that supplies technology or designs. The application requests the ToT provider’s shareholding details and structure. Critically, DPIIT will insist on declaring any overseas partner with over 10% stake (or control) in the technology agreement. This means minority joint ventures or licensing deals no longer slip through. For example, if an Indian firm’s product relies on Chinese machinery schematics, that Chinese collaborator must be named and vetting will apply.
Documentation and Security Vetting
To implement these rules, the tender registration forms have ballooned in size. Bidders must now produce exhaustive annexures vetted by Chartered Accountants. Full details are required for every key player: share certificates, net worth statements, board resolutions, auditor’s certificates, etc. Crucially, the DPIIT will forward all submissions to the Ministries of External Affairs and Home Affairs for clearance. This two-stage process means that no bid is accepted until those ministries sign off.
In practice, applicants will need to plan for weeks of processing. Every director and owner at each link in the chain must provide passport copies, addresses, and proof of identity. Analysts note that this level of scrutiny is unprecedented in Indian procurement. It reflects a clear trade-off: more transparency and national-security screening at the cost of speed and simplicity. (Indian entities in joint ventures will have to maintain these registrations continuously once approved.)
Strategic Focus: Sensitive Sectors & Technologies
The revised order explicitly stakes out strategic sectors. By listing specific industries and technologies, the government signals where it feels vulnerable. Now, any procurement involving defence, space, nuclear or related fields is automatically sensitive. Even civilian industries like aviation, electronics, agriculture are grouped into a second tier. Bidders in these fields should expect that any ToT link – however small – places them under the DPIIT microscope.
Similarly, vendors must think carefully about the technology embedded in their offerings. If a foreign partner contributes additive manufacturing (3D printing) know-how, satellite or broadcasting gear, or PLC/SCADA systems, that must be declared. Companies with intellectual property in these domains will find their proposals treated as high-risk. Strategically, this reinforces India’s “Make in India” and national-security objectives: it encourages domestic sourcing and vetting of advanced tech.
Industry Reactions and Analysis
Media coverage notes that the updated DPIIT norms build on India’s 2020-21 “trusted sources” policy. (For context, the government made prior approval mandatory for all foreign investment from China, Pakistan and other neighbours in April 2020.) The procurements rule is essentially a parallel approach for government contracts. DPIIT itself stated flatly that the application format “has been revised” and earlier bids need no redo. Analysts say this underscores India’s cautious stance on foreign-linked deals.
Legal and industry experts point out that while the aim is clear (protect critical industries), the compliance burden has risen substantially. A key concern is timing: bidders can no longer submit at the last minute because getting security clearances takes weeks. Some commentators advise companies to prepare documentation well in advance. Firms with even indirect ties to a border country should audit their supply chains and ownership structures now. In discussions, experts emphasize that professional guidance will be essential – the new DPIIT process is too detailed for firms to navigate unaided.
Conclusion & Next Steps
In summary, the 2023 DPIIT amendments make public tendering far more stringent for any foreign-tied bidder. The bar has been raised on disclosures, and checkpoints have multiplied. Affected companies – whether domestic firms using imported technology or foreign investors eyeing Indian contracts – should take heed. We strongly recommend engaging experienced advisors (legal and compliance) to review each bid before submission. Our team of industry-regulation specialists is ready to help you interpret these changes, assemble the new paperwork, and expedite your DPIIT registration. Don’t let a technicality derail your bid – consult knowledgeable professionals early in the process.
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In case you have any concern and queries or need any support in DPIIT Approval process, you may like to contact us.
Abhinarayan Mishra, FCA, FCS; Managing Partner, KPAM & Associates, Chartered Accountants, Dwarka, New Delhi; +9910744992, ca.abhimishra@gmail.com
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