The global economy has been severely affected by the COVID-19 pandemic and geopolitical conflicts, with small businesses bearing the brunt of the impact. However, there is a glimmer of hope for these small units as Central Public Sector Enterprises (CPSEs) have been increasingly procuring from Micro and Small Enterprises (MSEs) in recent times. In the fiscal year FY23, CPSEs purchased 35.6% of their goods and services from MSEs, a positive development compared to 32.48% in FY22 and 29.21% in FY21.The Indian government has been implementing various measures to support the MSME sector, including the revision of the Public Procurement Policy in 2018. The said policy mandates Public Sector Undertakings (PSUs) to acquire 25% of their total purchases from MSEs. Additionally, the policy has a special provision of 3% procurement for women entrepreneurs to support MSMEs’ marketing efforts. This policy has greatly contributed to the increase in procurement by CPSEs from MSEs.
Government’s Push for Procurement from MSEs Leads to Rs 61,033 Crore Increase in FY23, but Only 38% Through GeM
The procurement by CPSEs 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. This is a significant increase, and it has been possible due to the government’s encouragement to CPSEs to procure through the Government e-Marketplace (GeM) portal. However, it is noteworthy that despite the government’s push for 100% procurement through GeM, only 38% of CPSEs’ procurement is being done through this portal.
The increase in procurement by CPSEs from MSEs is a positive sign for the MSME sector, as it provides a much-needed boost to their revenues. This increase in procurement has also helped MSMEs mitigate the effects of the pandemic and geopolitical conflicts that have impacted their businesses. Therefore, it is essential to continue the efforts to increase procurement from MSEs further.
In conclusion, the increase in procurement by CPSEs from MSEs is a positive development for the MSME sector. The government’s policy of mandatory procurement from MSEs and the encouragement to procure through GeM has helped boost procurement from MSEs significantly. It is crucial to continue these efforts to support MSMEs and help them recover from the impact of the pandemic and geopolitical conflicts.