Deepak Garg from Sany Heavy Industry India Pvt Ltd shares views on L1 Bidding System

Infra projects must prioritize technology and machine efficiency over just the lowest bid. While upfront costs may be higher, advanced technologies reduce long-term expenses.

Deepak Garg
Vice Chairman & Managing Director
Sany Heavy Industry India Pvt Ltd

Transparency vs. Technology

For any economy, company, or a large corporation to survive, the bidding system has its own advantages. It brings transparency and pushes organizations to perform their best, as they compete with the strongest players in the industry. The buyer benefits by getting the most competitive product in the market.

The main limitation arises in terms of product quality and technology. In both civil infrastructure projects and equipment procurement, generic specifications often lead to dilution of innovative, efficient, or new-energy technologies. Today, we remain dependent on diesel products because bidding primarily favors the cheapest option rather than promoting advanced alternatives such as electric equipment.

Impact of Specifications on Buyer Decisions

The bidding process begins with the specifications set by the organization. These specifications are the main decision point in determining the type of technology being sought. Moderate or vague specifications discourage top-level companies from participating, while generic tenders push buyers toward low-cost, low-tech equipment.

For example, a tender that merely states “use an excavator” allows low-tech options. However, if the specifications require an excavator that delivers 300 cubic meters per hour, with defined fuel efficiency, internet capability, and fleet management capability, the buyer would be compelled to choose higher-technology options. Weak specifications, therefore, shift buyer preference towards cheaper equipment and reduce participation of advanced technologies from premium companies.

Recommendations for Better L1 Implementation

When framing bids, it is essential to clearly define the technological improvements being sought. Policymakers should ensure specifications demand high-tech, efficient, and future-ready equipment rather than generic requirements.

Adopting advanced technologies does not always increase overall project cost. While initial purchases may be higher, long-term costs often decrease. Preferential clauses could be introduced, similar to MSME provisions, where a technology that exceeds specifications and is within 10% higher in price still receives preference.

Incentivizing technology and localization are also important. Current incentives like Minimum Local Content (MLC) can be enhanced; bidders offering higher local content should receive additional preference.

The defense sector provides a useful example: fighter jets are procured based on critical specifications rather than the lowest price. Similarly, construction equipment and infrastructure projects should prioritize the latest technology and efficiency, rather than focusing solely on L1.