Ease of Doing Business for MSMEs: The share of goods and services purchased from micro and small enterprises (MSEs) by the central public sector enterprises (CPSEs) stood at 39.17 per cent for the first five-month period of the current fiscal year. Out of the total procurement worth Rs 37,928 crore made by CPSEs as of September 1, 2022, Rs 14,857 crore worth of purchase was made from 48,928 MSEs, data from the public procurement policy monitoring portal MSME Sambandh showed.
For the uninitiated, the government has mandated CPSEs to procure at least 25 per cent of their annual purchases from MSEs including a 4 per cent target from MSEs owned by SC/ST entrepreneurs and 3 per cent from women-owned MSEs. So far, 0.81 per cent procurement amounting to Rs 308 crore was made from 2,035 SC/ST entrepreneurs and 0.97 per cent purchase amounting to Rs 369 crore from 1,827 women-owned MSEs, data showed.
Importantly, the aggregate procurement by CPSEs from MSEs has been exceeding the 25 per cent minimum annual threshold consecutively since FY19. In fact, the FY22 and FY21 procurement shares from MSEs stood at 32 per cent and 28 per cent respectively. However, the government doesn’t intend to increase the 25 per cent target for CPSEs. “There is no thought on revising the 25 per cent to a higher level currently,” Ishita Ganguli Tripathy, Additional Development Commissioner, Office of DC-MSME, Ministry of MSME had told FE Aspire earlier.
On the other hand, an increase in procurement target, which would translate into more purchases from MSEs, might enhance the delay payment issue for small businesses. “Nothing better than a more competitive target but the only worry here is that it might add up to the cases where payments from the central government departments are pending and haven’t been cleared yet. While gradually MSMEs are getting their money but payments would have to be cleared in a more timely manner for businesses to operate flexibly,” a consultant at a financial advisory firm had told FE Aspire on anonymity.
The amount involved in delayed payment cases for MSMEs in FY22 had nearly doubled to Rs 5,685 crore from Rs 2,887 crore in FY20. In comparison to FY22, the amount pending during FY21 stood at Rs 5,747 crore, according to the data shared by the Minister of State (MoS) for MSMEs Bhanu Pratap Singh Verma in the Parliament in August.