Govt surpasses procurement target from small businesses but fails dismally in buying from these units

By: |
April 1, 2020 4:44 PM

Trade, Imports, Exports for MSMEs: Out of 54 ministries listed on the monitoring portal MSME Sambandh, around 16 ministries have surpassed the 25 per cent target for FY20.

The annual procurements from SC/ST and women entrepreneurs continue to miss the target.

Trade, Imports, Exports for MSMEs: Central ministries, departments and central public sector enterprises, which are mandated to procure 25 per cent of their annual procurement of goods and services from micro and small enterprises (MSE), have overachieved the target for FY20. The overall procurement worth Rs 33,384 crore from MSEs for the financial year stood at 29.16 per cent benefiting over 1.31 lakh MSEs. This is also up from 26.32 per cent procurement from MSEs worth Rs 40,378 crore benefitting 1.27 lakh units in FY19 after missing the target in FY18 wherein the government buying from MSEs stood at 23.11 per cent.

Out of 54 ministries listed on the monitoring portal MSME Sambandh, around 16 ministries have surpassed the 25 per cent target for FY20. The ones buying maximum amount of goods and surpassing the limit included the Ministry of Petroleum and Natural Gas, Ministry of Defence, Ministry of Power, Ministry of Atomic Energy, Ministry of Coal etc.

However, the annual procurements from SC/ST and women entrepreneurs, which were earmarked at 4 per cent and 3 per cent respectively and made mandatory from FY16 onwards, continue to miss the target. The purchases made during FY20 from SC/ST and women entrepreneurs stood at just 0.49 per cent and 0.26 per cent respectively.

Also read: MSMEs hail RBI’s time extension for receiving payments on exports from Covid-19 hit countries

“Large organisations and PSUs are not buying from many MSEs because of three reasons. First, it is about quality, second, is that pricing is not very competitive from MSEs and third is about time as most MSEs are not providing orders on time and most importantly, the requirements are coming very late,” Chandrakant Salunkhe, President, SME Chamber of India told Financial Express Online.

The procurement share for FY19 was just 0.54 per cent for SC/ST MSEs and 0.15 per cent for women-led MSEs. This was up from 0.48 per cent buying from SC/ST entrepreneurs in FY18 while there were no purchases made by government departments and organisations from women-led MSEs during the financial year. “Buyers don’t publish in advance their annual purchases. All procurement organisations should display their product and quantity of the year in advance so that MSEs with capacity can approach them in time. PSU companies also don’t advertise the requirements,” added Salunkhe.

The procurement amount with respect to Ministry of Petroleum and Natural Gas, Ministry of Defence, Ministry of Power, Ministry of Atomic Energy, and Ministry of Coal was Rs 18,149 crore, Rs 2,770 crore, Rs 2,065 crore, Rs 801 crore and Rs 654 crore, according to the data available on the MSME Sambandh portal.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Mindtree net profit jumps 66% to Rs 326 crore; company sees strong pipeline ahead
2Yes Bank board to meet on Friday to consider fund raising plan
3Healthcare sector’s revenue expected to grow 20% in 2021-22: Report