Class-I local supplier and PPP-MII for network equipment, explained

The Order was issued in 2017 under Rule 153(iii) of the General Financial Rules. DPIIT last revised it on 19 July 2024 (DPIIT order, 19 July 2024). It applies to procurement by central ministries, departments, attached and subordinate offices, autonomous bodies and government companies.

Local content is the value added in India: the item's total value (excluding net domestic indirect taxes), minus imported content (including customs duties), as a percentage of total value. The Order excludes:

• imported items bought locally from resellers or distributors;
• licence fees, royalties and technical charges paid outside India;
• repackaged, refurbished or rebranded imported products.

For multi-item contracts, local content is the weighted average across items.

Class-I vs Class-II vs non-local

How purchase preference works

If the lowest bid (L1) is from a Class-I local supplier, that supplier wins. If not:

• Divisible goods or works: L1 gets 50% of the quantity. The lowest Class-I bidder within 20% of L1 is invited to match L1 for the other 50%.
• Non-divisible goods, or services evaluated on price alone: the lowest Class-I bidder within 20% of L1 is invited to match L1 for the whole contract. If no Class-I bidder matches, L1 may win.

The minimum local content, the margin and the procedure must be stated in the tender and cannot change during that procurement.

DoT is the nodal ministry for telecom products. Its notification of 21 October 2024, published in the Gazette on 22 October 2024, replaced its earlier notifications of 2018 and 2021 (DoT notification). Its Table-A lists telecom items that have "sufficient local capacity and local competition". Under clause 3(a) of the DPIIT Order, only Class-I local suppliers can bid for these items, whatever the purchase value.

Other points in the notification that bid teams should know:

• Design ceiling. Table-A also caps how much of the local content can come from design, item by item.
• TEC standards. Where a Table-A item has a TEC GR or IR, the procuring entity must specify it as the minimum requirement.
• No local value from services on imported products. Bidders offering imported products are non-local suppliers. They cannot count transport, insurance, installation, training or AMC/CMC as local value addition.
• PLI manufacturers. Manufacturers that have received incentives under the telecom PLI scheme are treated as deemed Class-II local suppliers for listed products, for the specified period.
• Complaints and checks. A committee chaired by DDG (TC), TEC, verifies self-declarations at random and on complaint. The complaint fee is Rs 2 lakh or 1% of the value, whichever is higher, capped at Rs 5 lakh.
• Start-ups. Prior turnover and experience conditions may be relaxed for DPIIT-recognised start-ups that meet quality and technical specifications.

DoT opened a consultation on further changes to the telecom local content framework in June 2025 (The Tribune). Always check the percentage stated in the tender you are bidding on. That figure governs the procurement.

Many network projects are bought as SI, EPC or managed-service contracts, not as boxes. The 2024 revision added clause 3.1: items notified as having sufficient local capacity must be sourced from Class-I local suppliers inside SI, EPC, turnkey and service tenders too. The Secretary of the ministry, or an authority the Secretary names, can relax this case by case. For an SI, this means the router, SD-WAN edge or switch it proposes must itself meet the Class-I threshold.

Network security products also fall under MeitY's cyber security product order. MeitY notified cyber security products under the PPP-MII framework in 2019 (MeitY). In an office memorandum of 4 March 2021, it told ministries and PSUs that conditions such as minimum turnover, particular global certifications and analyst-quadrant rankings were restrictive and discriminatory against Indian suppliers (Communications Today).

The DPIIT Order itself (clause 10) says:

• eligibility conditions must not require proof of supply in other countries or proof of exports;
• turnover, production capability and financial strength conditions must not unreasonably exclude local suppliers;
• specifying foreign certifications, unreasonable technical specifications, brands or models is restrictive and discriminatory. A foreign certification can be required only with the written approval of the Secretary of the department.

If a draft RFP includes such conditions, raise it in the pre-bid meeting and cite the clause.

Two other rules often sit next to PPP-MII in network tenders:

• Land-border restriction. Since the Department of Expenditure's order of 23 July 2020 (Rule 144(xi) of the GFR), a bidder from a country sharing a land border with India can bid in public procurement only if registered with the DPIIT Registration Committee (DoE order). Tenders usually ask for a declaration.
• Trusted sources for telecom networks. Under the National Security Directive on Telecommunication Sector, telecom licensees may connect only trusted products from 15 June 2021 (MediaNama; Tele.net). The National Cyber Security Coordinator designates trusted sources and products through the Trusted Telecom Portal. This binds telecom operators and their suppliers. It is separate from PPP-MII.

Product certification is also separate: routers and gateways need TEC MTCTE, and IP routers need NCCS ComSec. See Is MTCTE mandatory for routers?

A false declaration breaches the Code of Integrity in the GFR. The bidder can be debarred for up to two years. If a Class-I supplier later turns out to be Class-II or non-local, a penalty of up to 10% of contract value may be imposed.

Nexapp is an Indian OEM, headquartered in Pune, that designs its SD-WAN, NGFW, SSE/ZTNA and Instaroute routers on its own NexappOS operating system. Nexapp is a Class-I local supplier under the PPP-MII Order. For government and PSU bids, you get the OEM local-content certificate for each bid, TEC MTCTE certificate 244903206 for nine Instaroute models, and specification sheets matched to your BoQ. Management can be self-hosted in your data centre or hosted by us in India. See government and PSU for the tender clause list, and partners for SI authorisation.