The Central Public Sector Enterprises (CPSEs)’ procurement from micro and small enterprises (MSEs) continues to rise steadily, with these entities accounting for 42.2% of the CPSE’s total purchases so far in 2025-26 compared with 35% achieved in the whole of 2024-25. These figures are well above the mandatory 25% annual procurement requirement from these small units.
Of the Rs 35,090 crore procurement by CPSEs so far in FY26, procurement from MSEs stood at Rs 15,224 crore. Procurement from women entrepreneurs stood at Rs 1,088 crore so far in FY26.
To provide marketing support to MSEs, the government modified the Public Procurement Policy in 2018, making it mandatory for public sector companies to procure 25% up from 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 26,344 crore (23% of the total) in FY18 to Rs 53,423 crore (32.48%) in FY22, Rs 61,033 crore (35.6%) in FY23 and Rs 93,568 crore (35%) in FY25.
Thanks to government intervention, CPSEs procure mostly through the Government e-Marketplace (GEM) portal, benefitting the MSEs.
The micro small and medium enterprises (MSMEs), which are a key focus area of the Modi government, continue to receive increased attention from the government given their job creation potential.
Over 1 crore registered MSMEs, employing 75 million people, and accounting for 36% of the country’s manufacturing and 45% of exports growth and stability of MSME sector is important to further India’s position as a global manufacturing hub.
The Union Budget 2025-26 introduced a series of measures aimed at strengthening the MSMEs. To help businesses expand and improve efficiency, the investment and turnover limits for MSME classification have been raised. Access to credit is set to improve with an increase in the credit guarantee cover for micro and small enterprises, startups, and export-focused MSMEs. A new scheme will provide financial support to first-time entrepreneurs from disadvantaged backgrounds, while sector-specific initiatives will enhance productivity in areas such as footwear, leather, and toy manufacturing.