In the current financial year so far, public procurement worth Rs 44,198 crore has been made by the government, of which Rs 13,325 crore (30.15 per cent) worth procurement was made from 67,224 MSEs so far. (Express File/Gurmeet Singh) (Representational image)

Ease of Doing Business for MSMEs: If there is one scheme for small businesses where the government has perhaps continuously overachieved its target in the past few years, it is public procurement policy. The official data since FY19 showed that central ministries’ procurement share from micro and small enterprises (MSEs) was 26 per cent followed by 30 per cent in FY20, and 28 per cent in FY21 while it also continued to stay above the 25-per cent mark in the current financial year so far. The government had earmarked a 25 per cent target for various ministries and departments in their annual procurement from MSEs from April 1, 2015, onward up from 20 per cent earlier.

While majority of the 54 ministries/departments — listed on the MSME Ministry’s public procurement policy monitoring portal MSME Sambandh — have already made significant amount of purchases from MSEs during the first two quarters of FY22, a handful of them have been outliers in terms of their procurement share.

A total of five ministries/departments including Ministry of Agriculture & Farmers’ Welfare, Ministry of Housing and Urban Affairs, Ministry of Ports, Shipping and Waterways, Ministry of Textiles, and Department of Atomic Energy have already crossed the 25 per cent procurement threshold based on their current purchases, the data showed.

“There has been a significant procurement by these ministries from MSEs. I think the target is low as a lot more potential is there for buying from MSEs while the procurement level will only go up from here. The government’s focus has been on MSEs in the MSME segment through this scheme. Ministries like textiles and agriculture would have significant impact on MSEs. Even for the space sector, niche small players are playing a major role which is a good sign. There has been a substantial increase (in transactions) across these categories on our portal as well,” Prashant Kumar Singh, CEO, Government e-Marketplace (GeM) told Financial Express Online. The GeM portal currently has nearly 30 lakh sellers including 7.26 lakh MSEs that have an order value share of 56.48 per cent.

Also read: Textiles: What does govt’s extension of Handicrafts Cluster Development scheme means for artisans, SMEs

While purchases for agriculture ministry has already crossed Rs 18.38 crore – 25 per cent of Rs 73.50 crore annual purchase target – to Rs 19 crore, housing and urban affairs ministry has so far bought goods worth Rs 1.73 crore vis-a-vis Rs 69 lakh target of their overall aim of Rs 2.74 crore. Likewise, textiles ministry purchased goods worth Rs 17.35 crore against their Rs 15.08 crore target. The biggest jump in terms of sheer value (amount spent) of purchases was recorded by the Department of Atomic Energy. It procured goods worth Rs 428.75 from MSEs in comparison to Rs 346.80 crore target based on their overall purchase target of Rs 1,387 crore currently. On the other hand, ports and shipping ministry overachieved its target by a relatively thinner value. Its purchases stood at Rs 293.60 crore against Rs 293.35 crore target.

“Small businesses have also been engaging with other ministries. For instance, in freight forwarding, most businesses are MSMEs providing goods to not just private entities but also the government. In our case, we had supplied PPE kits and other Covid-related items, which were imported from different countries, to health ministry. So that way we are connected with the government. We would certainly look at enhancing supply of goods to various ministries even though selling to private entities currently have more potential,” PS Atree, Founder and Director at freight forwarding firm PS Atree & Company told Financial Express Online.

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However, it is important to note that a number of other ministries or departments have procurement values much higher than these five ministries but those values are still to hit or cross their respective 25 per cent targets. For instance, Ministry of Petroleum and Natural Gas has already made procurement from MSEs worth Rs 7,011 crore while its target is Rs 12,811 crore based on current overall purchase target. Similarly, goods worth Rs 1,492 crore has been purchased by Ministry of Power from MSEs against the target of Rs 2,309 crore while Ministry of Defence has bought goods worth Rs 1,433 crore from MSEs vis-a-vis Rs 2,620 crore target, among few other ministries.

The MSME ministry has also made purchases worth Rs 8.76 crore so far while its 25 per cent target stood at Rs 15.35 crore of its total annual procurement target of Rs 61.40 crore currently. In the current financial year, public procurement worth Rs 44,198 crore has been made by the government, of which Rs 13,325 crore (30.15 per cent) worth procurement was made from 67,224 MSEs so far. This included Rs 317 crore goods bought from 2,315 MSEs owned by scheduled caste and scheduled tribe entrepreneurs while Rs 327 crore worth procurement was made from 2,245 MSEs owned by women entrepreneurs.