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The Central Public Sector Enterprises (CPSEs)’ procurement from Micro and Small Enterprises (MSEs) has risen steadily in recent years, a trend that enabled them to cushion the impact of the pandemic and geo-political conflicts.
As much as 35.6% of CPSEs’ purchases of goods and services were from MSMEs in FY23 compared with 32.48% in FY22 and 29.21% in FY21, all well above the mandatory 25% annual procurement requirement from these small units.
To provide marketing support to MSEs, the government modified the Public Procurement Policy in 2018, making it mandatory for PSUs to procure 25%, instead of 20% of their total purchases, from MSEs including a special provision of 3% procurement for women entrepreneurs.
As a result, CPSEs procurement from MSEs’ rose from Rs 26,357 crore (23.1% of the total) in FY18 to Rs 53,423 crore in FY22 and Rs 61,033 crore in FY23.
However, despite the government nudging CPSEs to procure 100% through the Government e-Marketplace (GEM) portal, 38% of their procurement was outside of the GeM in FY23.
Of the CPSEs’ total procurement which stood at Rs 1.71 trillion in FY23, Rs 1.06 trillion was through GeM in FY23.
The heads of the CPSEs have been asked to certify to the secretaries of the administrative ministry concerned that only those goods and services have been procured outside GeM which are not available on GeM. Finance Minister Nirmala Sitharaman has been nudging CPSEs to avoid purchases outside of the GeM.
