Ease of Doing Business for MSMEs: The central authorities purchases from micro and small enterprises (MSEs) have hit a file excessive within the monetary 12 months 2021-22, in keeping with the official information. This comes within the backdrop of the gradual enhance within the share of procurement comprised of MSEs by most of the federal government ministries and departments out of their total annual public procurement up to now 4 years barring the Covid 12 months. In reality, going by the info out there on the general public procurement coverage monitoring portal MSME Sambandh, the mixture procurement by the central authorities from MSEs has been exceeding the 25 per cent minimal annual threshold consecutively since FY19.
The background to this development is the federal government had earlier mandated public patrons to obtain not less than 20 per cent of their annual procurement of products from MSEs. The restrict was enhanced to 25 per cent in 2018. In FY19, the MSE procurement share was 26.32 per cent amounting to Rs 40,399 crore which jumped to 30.18 per cent in FY20 although the worth declined marginally to Rs 39,665 crore. It additional elevated to 33.93 per cent price Rs 42,586 crore in FY22 after dipping to 27.95 per cent, although nonetheless above the 25 per cent threshold, throughout FY21 amid Covid.
However, in the course of the FY15-FY17 interval, the federal government patrons had failed miserably to hit the minimal procurement ranges. The share of presidency procurement from MSEs stood at solely 11.6 per cent in FY15, 4.5 per cent in FY16, and 10.3 per cent in FY17, in keeping with the out there information.
The newest 33.93 per cent development was achieved on the again of 28 ministries and departments procuring items from MSEs. Of these 28, 19 had surpassed the 25 per cent minimal buy degree whereas 9 others had did not hit the mark, the info on the Sambandh portal confirmed.
The 19 ministries with their respective shares of procurement from MSEs past 25 per cent included the Ministry of Textiles (83.8 per cent), Science and Technology (77.9 per cent), Atomic Energy (75.3 per cent), Minority Affairs (66.7 per cent), Housing and Urban Affairs (59.9 per cent), Railways (57.1 per cent), Shipping (56.3 per cent), Consumer Affairs, Food and Public Distribution (53.3 per cent), Tribal Affairs (52 per cent), Agriculture & Farmers Welfare (47 per cent), Power (40.3 per cent), Defence (40 per cent), Tourism (38.6 per cent), Mines (38.5 per cent), Steel (38.4 per cent), Petroleum and Natural Gas (35.4 per cent), Social Justice and Empowerment (33.9 per cent), and Heavy Industries (26.4 per cent). Importantly, MSME Ministry had barely managed to affix the checklist with 25.5 per cent procurement.
However, when it comes to the sheer dimension of procurement worth, the Ministry of Petroleum and Natural Gas had purchased the utmost quantity of products price Rs 18635.93 crore from MSEs in FY22 adopted by the Ministry of Defence at Rs 4,393.18 crore and the Ministry of Power at Rs 3,739.48 crore.
“We are happy about the growth in procurement. The important thing is over the last few years the number of MSEs benefited under procurement has also grown steadily while the share in overall procurement has also improved year on year,” Ishita Ganguly Tripathy, Additional Development Commissioner, Office of Development Commissioner, Ministry of MSME instructed Financial Express Online. The variety of MSE beneficiaries beneath public procurement had jumped 49 per cent from 1.28 lakh in FY19 to 1.91 lakh in FY22, information confirmed.
According to specialists, MSEs getting greater than 25 per cent share in authorities procurement is no surprise. Gujarat-based Umesh Balani who runs Rotomag Motors & Controls to fabricate electrical motors for flooring care, automation, hydraulic energy packs, and so forth., mentioned most ministries challenge a number of small tenders that usually see participation from MSMEs.
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“It is not easy for one large company to, let’s say, participate in 500 small ticket tenders in comparison to 500 small businesses applying for those tenders. Hence, by nature of the tender and size of small businesses, MSMEs have a natural advantage in such tenders. For example, if there is a tender to make an expressway, it would suit one large enterprise to build it while multiple MSMEs can also offer support but for tenders to make taluka level or district/town level roads, MSMEs remain primary contenders,” Balani, who can also be the Chairman of Assocham’s MSME Development Council, instructed Financial Express Online.
Under the general public procurement coverage for MSEs, the federal government additionally gives advantages of free-of-cost tender units and exemption from the cost of earnest cash to MSEs. Moreover, there are 358 objects similar to air coolers, bolts & nuts, PVC pipes, shovels, metal trunks, and picket chairs reserved for unique procurement by the federal government from MSEs. The authorities additionally operates the Government eMarketplace (GeM) portal for the web procurement of products. Since its launch in August 2016, over 98 lakh orders price Rs 2.26 lakh crore from almost 60,000 authorities patrons have been processed via GeM. Over 40 lakh MSMEs are at the moment registered as sellers on GeM, of which 7.64 lakh are MSEs.
Nonetheless, 9 ministries that couldn’t hit and surpass the minimal procurement mark from MSEs have been the Ministry of Ayush which didn’t make any buy from MSEs, Ministry of New and Renewable Energy which made solely 7.14 per cent procurement from MSEs, Coal (13.4 per cent), Finance (15.4 per cent), Commerce and Industry (19.6 per cent), Chemicals and Fertilizers (20.1 per cent), Communications (21 per cent), Space (21 per cent), and Health & Family Welfare (22.4 per cent).
Emails to the 9 ministries looking for feedback on underachieving the MSE procurement goal didn’t solicit replies until the time of publishing this story.
However, Tripathy mentioned the federal government had taken up the problem of decrease procurement with respective departments and ministries not too long ago. “Along with the Department of Public Enterprises, we had a structured discussion last month with central public sector enterprises under various ministries to encourage them to procure as much as possible from MSEs. We also tried to understand any issues they might be facing in procurement, their understanding of the Public Procurement Policy order by the government, etc.,” she added.
From SMEs’ perspective, the problem is extra regulatory. “There are problems such as lack of proper grievance redressal system. You don’t hear easily from the concerned ministry or department on the reasons in case your products are not procured. The ease of access to online services such as bids submission is not that smooth. You have to visit the respective government office before the transaction is closed. We had our products approved with multiple government offices such as the Central Public Works Department, Delhi Metro, etc., but were not procured from us,” Ashok Agarwal, Managing Director of plywood manufacturing agency, Vidya Ply and Board instructed Financial Express Online.
Meanwhile, the problem of decrease procurement by the federal government has been extra crucial with respect to the share of SC/ST and women-owned MSEs, which has remained traditionally dismal.
Against the federal government’s mandate to obtain not less than 4 per cent from SC/ST MSEs and three per cent from ladies MSEs inside the 25 per cent MSE procurement restrict, the procurement shares of each classes have remained lower than 1 per cent to date. In FY22, Rs 962 crore of products have been procured from 8,193 SC/ST MSEs with a share of solely 0.77 per cent in total MSE procurement. Likewise, Rs 1,166 crore of products have been bought from 8,273 ladies MSEs with solely 0.93 per cent share.
Tripathy had earlier instructed Financial Express Online that within the authorities’s discussions with CPSEs over this challenge, three causes have been recognized — first, mismatch of their necessities and items produced by ladies MSEs; second, high quality points with ladies MSEs’ produced items; and third, restricted product vary to cater to CPSEs wants. “We would be further focusing on Vendors Development Programmes (VDA),” she mentioned whereas emphasising the federal government’s goal this 12 months to enhance present procurement ranges to the targetted 3 per cent from ladies MSEs and 4 per cent from SC/ST MSEs.
Source: www.financialexpress.com”