Government tenders in India is an opportunity to get business orders from the government of India. Central Government Spending Rupees 8 Lakhs crore value orders to business people every year. About rupees, 1 lakh crore value has reserved for small business people like us.
Public Procurement Policy 2012 Act guides union Government Tenders in India. It gives micro, small business people, Women, and SC/ST Entrepreneurs opportunities. Let’s see how to get that?
1. Government Tender Reservations
Mandatory Conditions of Governement Tenders
Under the amended Public Procurement Policy 2012 for MSEs, a minimum 25% share out of the total annual procurement by the Union Government is to be made from MSEs.
IsthereanyreservationforMSEs ofSC/ST/Women entrepreneurs?
Yes. Out of the 25% target of annual procurement from MSEs (Not in the specific tender), 4% is for SC/ST entrepreneurs
a sub-target of 4% (within the 25% owned by Scheduled Caste (SC) / Scheduled Tribe (ST)entrepreneurs, and 3% (within the 25%) of annual procurement from MSEs is earmarked for procurement from MSEs owned by women entrepreneurs.
However, in the event of failure of such MSEs to participate in the tender process or meet tender requirements and L1 price, 4% sub-target for procurement earmarked forMSEs owned bySC/ST entrepreneurs and 3% reserved to women entrepreneurs will also be met from other MSEs.
What is the date of implementation of the policy?
The policy is applicable from 1.4.2012 and became mandatory from 1.4.2015 onwards.
Products Reservation on Government Tenders
How many items are reserved for exclusive purchase from MSEs?
358 items reserved for exclusive purchase from MSE Sector.
What are the items or goods which can be procured from MSEs to achieve the target of 25% from MSEs ?
To achieve the target Government / CPSUs, they can procure
- The items from the list of 358 items reserved for procurement from MSEs.
- Items which are being manufactured by MSEs, besides reserved items.
- In this Government Tenders Large companies cannot participate.
Reservation Eligibility Government Tenders
Who is eligible for availing the benefits under the Public Procurement Policy?
An enterprise registered with any other organization under the Ministry of MSME shall register itself under Udyam Registration.
With effect from 01.07.2020, MSEs registered under Udyam Registration can benefit from the policy.
Which is SC/ST enterprise?
The definition of MSEs owned by SC/ ST is as given under:
- proprietor(s) shall be SC /ST in proprietary MSE
- For partnership MSE, the SC / ST partners shall be holding at least 51% shares in the unit.
- In Private Limited Companies, SC/ST promoters should have atleast 51% of Share.
Are MSEs having Udyam Registration Certificate eligible for availing benefits under the PP Policy?
Yes. Udyam Registered MSMEs can avail of the benefits under the Public Procurement Policy.
Is this policy mandatory under any Act?
Yes, the policy is mandatory and notified under the MSMED Act, 2006.
Is the Policy transparent, competitive and cost effective?
The policy rests upon core principles of competitiveness, adhering to sound procurement practices and executing orders for goods and services by a fair, equitable, transparent, competitive, and cost-effective system.
Is the policy implemented in parts or fully from its inception?
It is mandatory for all Central Government Ministries / Departments/ CPSUs (Hereafter Central Government will be used to replace all Central Government Ministries / Departments/ CPSUs)
The central government will procure at least 25% of their annual procurement from MSEs, including 4% (within the 25%) from MSEs owned by SC/ST entrepreneurs and 3% (within the 25%) from MSEs owned by women entrepreneurs.
2. Monitoring Government Tenders
Is there any monitoring system for assessing the Government procurement from MSEs?
To monitor the progress of procurement by Central Government from MSEs, the Ministry of MSME has launched the MSME Sambandh Portal to upload procurement details by all CPSUs on a monthly, and annual basis regularly monitored the Ministry of MSME.
Is there any review mechanism for monitoring and reviewing of the Government Tenders?
A Review Committee has been constituted under the Chairmanship of Secretary, Ministry of MSME, to monitor and review the Government Tenders for MSEs.
M/O MSME will review and/or modify the composition of the Committee as and when required.
This Committee will, among other things, continuously review the list of 358 items reserved for exclusive purchase from MSEs.
This Committee considers requests from Central Government Departments CPSUs for exemption from 25% target on a case to case basis and monitor achievements under the policy.
Whether there is any kind of purchase that has been kept out of the purview of procurement under the Policy? If yes, how is the monitoring of the set goal done?
Given their unique nature, Defense armament imports will not be included in computing the 25% goal for M/o Defense. In addition, Defense Equipment like weapon systems, missiles, etc., will remain out of the purview of such a reservation policy.
Monitoring of goals set under the policy will be done, in so far as they relate to the Defense sector, by the Ministry of Defense itself by suitable procedures to be established.
3. Price Preference for MSEs
Is there a price matching facility for procurement from MSEs over large scale?
MSEs quoting price within the band of L1+15% shall also be allowed to supply a portion of the requirement by bringing down their price to L1 price in a situation.
Here the L1 price is from someone other than an MSE. Such MSEs shall be allowed to supply at least 25% of the total tendered value.
In case L1 is not an MSE and there is more than one MSE within the range of L1+15%, only the lowest MSE shall be considered for 25% order in case of divisible item (or 100% in case order quantity is not separable), subject to matching the L1 prices.
The refusal of such the lowest MSE to accept the L1 price shall be considered the second-lowest MSE within the range of L1+15%. This process shall continue until an MSE in the range accepts the L1 price or the MSEs in the L1+15% range are exhausted.
If no MSE accepts the L1 price or is no MSE available in the L1+15% range, the order shall be placed without applying this principle.
Can MSEs quoting a price within the band L1+15% be given complete supply to tender in case tender item cannot be split /divided?
In case of the tender item cannot be split or divided, etc., the MSE quoting a price within the band L1+15% may be awarded for full/ complete supply of total tendered value to MSE, considering the spirit of the policy for enhancing Procurement from MSEs.
4. Actions to acheive MSEs Target
What steps are to be taken by the Central Government to develop MSE Vendors so as to achieve their targets for MSEs procurement?
The Central Government Ministries/ Departments/ Public Sector Undertakings shall take the necessary steps to develop appropriate vendors by organizing Vendor Development Programmes (VDPs) or Buyer-Seller Meets focused on developing MSEs for procurement GeM Portal.
To develop vendors belonging to MSEs for Public Procurement Policy, the Ministry of MSME is regularly organizing State Level VDPs and National Level VDPs under the Procurement and Marketing Support Scheme.
What are the steps taken by the Ministry of MSME to promote marketing through GeM portal for supply of Goods or rendering services from MSEs to Government Departments and CPSUs?
- CEO, GeM has been requested to make a provision in the GeM portal for procurement of goods and services from MSEs through linking URC.
- Udyam Registration Portal has a facility through which an entrepreneur can opt for linking itself with Government e-market (GeM) place by selecting an option on Udyam Portal.
- The enterprise will be linked to GeM portal and flow of information will start between these two portals. With this facility, MSEs can link themselves with the Government’s procurement system and can participate in Government’s mandatory procurement programme from MSEs
- All CPSUs have been requested to procure goods and services from MSEs, through GeM portal only.
- The Ministry of MSME has signed an MOU with CEO, GeM, for mobilizing MSEs for onboarding themselves on the GeM portal for supply of goods & services from MSEs.
- All UAM holders had been requested to register themselves on GeM portal for supply of goods and services through GeM portal.
What steps are to be taken by the union Government to develop vendors from MSEs owned by SC/ST/Women entrepreneurs?
For enhancing the participation of MSEs owned by SCs / STs/ Women in Government procurement, Central Government Ministries / Departments / CPSUs have to take the following steps:
- Special Vendor Development Programmes/ Buyer-Seller Meets would be conducted by Departments/ CPSUs for SC/STs and Women.
- National Small Industries Corporation is conducting the outreach programmes
(NSIC) to cover more and more MSEs from SC/STs under its schemes of consortia formation; and
- NSIC would open a special window for SCs/ STs under its Single Point Registration Scheme (SPRS).
- A National SC/ST hub scheme is handholding support to SC/ST entrepreneur which is being coordinated / implemented by the NSIC under this Ministry.
- NSIC is coordinating with Organisations works for only SC/ST entreprneurship Development like Adidravidar Confederation of Trade and Industrial Vision to bring more SCST Entrepreneurs.
5. Other Benifits on Governement Tenders
What are the other benefits / facilities available to the MSEs under the policy?
To reduce the transaction cost of doing business, providing them tender sets free of cost, exempting MSEs from payment of earnest money deposit, adopting e-procurement to bring transparency in the tendering process will help MSEs.
However, exemption from paying the Performance Bank Guarantee is not covered under the policy. MSEs may also be given relaxation in prior turnover and prior experience criteria during the tender process.
What is the grievance redressal mechanism in case of non-compliance of the Policy by any Government Department?
To redress the grievances of MSEs related to non-compliance with the policy, a Grievance Cell named “CHAMPION Portal” has been set up in the Ministry of MSME.
From where can the details of the Policy be obtained?
Policy details are available on the website of this office at www.dcmsme.gov.in.
Whether this policy is applicable for works/ trading activities also?
The policy is meant to procure only goods produced and services rendered by MSEs. However, traders/ distributors/ sole agent/ Works Contract is excluded from the purview of Public Procurement Policy for MSEs Order,2012.
Whether the Policy is applicable for MSEs registered with NSIC?
The policy is applicable for all MSEs registered under Udyam Registration and Udyog Aadhar Memorandum (valid till 31.03.2022).
Whether the Policy provides benefits for exemption from Security Deposit/ Performance Bank Guarantee to MSEs?
There is no exemption on Security Deposit/ Performance Bank Guarantee under the policy.
Does the Ministry give any certificate for MSEs having Udyam Registration?
Udyam Registration Certificate (URC) has been introduced through a dedicated portal on a self-certification basis.
Is the Public Procurement Policy applicable to State Governments/ State Departments/ State PSUs?
The Public Procurement Policy for MSEs Order, 2012 applies to Central Government Ministries/ Departments and CPSUs. This policy does not apply to State Government Ministries/ Departments/ PSUs.
Are the benefits of Public Procurement Policy applicable to MSEs who are not registered for the tendered items?
The policy’s benefits to a particular item should be given only to those MSEs registered for that item group (NIC code) in the MSME certificate.
Can the relaxation of norms for start ups and MSEs in Governement Tenders in prior experience and prior turnover criteria be given to all MSEs?
It is clarified that all Central Government tenders may relax conditions of prior turnover and prior experience concerning MSEs in all Government Tenders, subject to the quality and technical specifications.
However, there may be circumstances like procurement of items related to public safety, health, critical security operations and equipment, etc.
Where procuring entities may prefer the vendor to have a prior experience rather than giving orders to new entities.
Has the Ministry clarified the sub target of procurement from SC/STs/Women entrepreneurs under amended Public Procurement Policy for MSEs, Order 2012?
It is clarified that sub-targets of 4% (within 25% of annual procurement target) and 3% (within 25% of yearly procurement target) have been earmarked for procurement from MSEs owned by SC&ST and Women entrepreneurs, respectively under the amended Public Procurement Policy for MSEs Order, 2012.
Is there any provision to take action against the defaulting MSEs under the Policy?
There is no such provision under the policy. The procuring entity may take appropriate action per the tender documents’ terms and conditions (T&C) and/or GFR Rules.
Are financial institutions/ autonomous bodies included in the PP Policy?
The policy is applicable for all Central Government Ministries/ Departments and CPSUs.
Can the Ministry take action against the procuring agency for Delay in return of the Security Deposit of the MSEs?
There is no such provision under the policy. The matter can be referred to the department concerned for taking appropriate action in the interest of the MSE complainant.
Is it mandatory for MSEs to disclose their status as SC/ST/Women in Udyam Registration Certificate (URC)?
Yes, disclosing the status as SC/ST/Women in Udyam Registration is mandatory.
Have the State Governments been asked to frame a Public Procurement Policy for MSEs?
Yes, all the State Governments have been requested to frame the Public Procurement Policy on similar lines.
HavealltheCPSUsbeenuploading theirmonthlyandannual procurement details, on MSME SAMBANDH Portal?
Most of the CPSUs are uploading their procurement details on the portal.
Is there any provision to take action against the procuring agency for non-compliance of PPP-MSE under the Policy?
No, there is no such provision in the policy.
What is the objective of the Policy?
The objective of the policy is to promote MSEs by improving their market access and competitiveness through:-
- Increased participation in Government Tenders.
- Encouraging relationship (including product development) between MSEs and Public Sector Undertaking (PSUs).
- Increased share of supplies of MSEs to Central Government Ministries/ Departments and CPSUs.
- Increased share of supplies of MSEs to Central Government Ministries/ Departments and CPSUs.
How is the status of Enterprises as MSEs be verified?
The status of enterprises as MSEs can be verified through their Udyam Registration Certificate.
The General Manager of the District Industries Centre of the District concerned shall undertake an inquiry to verify the details of Udyam Registration submitted by the enterprise.
And thereafter forward the matter with necessary remarks to the Director or Commissioner or Industry Secretary concerned of the State Government who, after issuing a notice to the enterprise and
after allowing presenting its case and based on the findings, may amend the details or recommend to the Ministry of MSME, Government of India, to cancel the Udyam Registration Certificate.
Can sub-contracting be considered under the procurement target from MSE?
Yes, if subcontract is given to MSEs, it will be considered procurement from MSEs.
If MSEs participate in tender but the procuring agency denies providing benefits under the Policy, how can the problem be addressed?
The problem can be resolved through the Grievance Cell to tackle such situations, and the matter may be referred to the procuring agency concerned to redress the problem.
Can Joint Ventures take the benefits of the Public Procurement Policy for MSEs Order, 2012?
No, Under Udyam Registration (and earlier under UAM), there is no provision of registration of Joint Ventures.
Can Consortiums with Foreign Company takes the benefits of the Public Procurement Policy for MSEs Order, 2012?
No, Under Udyam Registration (and earlier under UAM), there is no provision of registration of Consortium.
Can trader benefits from Public Procurement Policy, for MSEs Order, 2012?
No. Retail and Wholesale traders can register on Udyam Registration Portal for Priority Sector Lending (PSL) only.