Central PSUs procurement from micro and small enterprises is increasing steadily

A whopping 35.6% of CPSEs’ procurement of goods and services was from MSMEs in FY23 compared to 32.48% in FY22 and 29.21% in FY21, all well above the mandatory 25% annual procurement requirement of these small units.

To provide marketing support to MSEs, the government amended the public procurement policy in 2018, making it mandatory for PSUs to procure 25% instead of 20% of their total procurement from MSEs, including a special provision of 3% procurement for female entrepreneurs.

As a result, CPSEs’ procurement from MSEs increased 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 encouraging CPSEs to procure 100% through the Government e-Marketplace (GEM) portal, 38% of their procurement was non-GM 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 concerned administrative ministry that only those goods and services are procured outside GeM which are not available at GeM. finance minister Nirmala Sitharaman has nudged CPSEs to avoid buying outside GeM.