Call for Clarity on India’s Software Localisation Norms for Government Contracts

New Delhi, Apr 23 (KNN) India’s software localisation norms for government procurement need urgent rationalisation, according to Victoria Espinel, CEO of Business Software Alliance (BSA), a global policy advocacy group.

She urged policymakers to simplify and clarify the requirements to enable global companies to better navigate the bidding process for government contracts.

Espinel pointed out that although many global software companies operate large development centres in India, they often struggle to quantify how much of their software is “Made in India.”

The challenge lies in the absence of clear standards to measure domestic value addition in software—unlike physical goods, where components and materials can be more easily tracked.

Jared Ragland, BSA’s Asia-Pacific policy director, echoed this concern. “Even Indian software companies find it difficult to prove local content. There’s no clear metric to assess whether a solution meets a 20 per cent or 30 per cent localisation threshold,” he said.

The Indian government mandates minimum local content for suppliers in government procurement—50 per cent for class-I and 20 per cent for class-II suppliers, as per the Department for Promotion of Industry and Internal Trade (DPIIT). Additional localisation rules may be applied by individual ministries.

However, Ragland noted that intangible elements such as capital investments, R&D, and post-sale services are excluded from localisation calculations. This, he argued, makes compliance nearly unworkable.

In contrast, Espinel highlighted that countries like Saudi Arabia adopt broader criteria for domestic value addition, including investments in R&D and local job creation.

BSA’s call to action urges India to adopt a more flexible and transparent framework, ensuring that both domestic and international software companies can participate fairly in public sector projects.

(KNN Bureau)