Relax artificial entry barriers for MSMEs, SC/ST enterprises, Government tells PSUs

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New Delhi | July 8, 2018 12:11 PM

The government has asked central PSUs and other government departments to relax 'artificial entry barriers' related to prior experience and turnover criteria in tenders, as it looks to boost procurement from MSMEs and SC/ST owned enterprises, a top official said

 artificial entry barriers, government, msme's, psu, tenders, sc, st, enterprises, narendra modi, artificial entryIn April, Prime Minister Narendra Modi had expressed concern over less procurement by CPSEs from MSMEs, and prodded them to buy more from the small units and also ensure timely payments. (Reuters)

The government has asked central PSUs and other government departments to relax ‘artificial entry barriers’ related to prior experience and turnover criteria in tenders, as it looks to boost procurement from MSMEs and SC/ST owned enterprises, a top official said. The procurement from SC/ST owned enterprises stood at 0.5 per cent in 2017-18. The Public Procurement Policy mandates 20 per cent annual procurement from micro, small and medium enterprises including 4 per cent from MSMEs owned by SC/STs.

In April, Prime Minister Narendra Modi had expressed concern over less procurement by CPSEs from MSMEs, and prodded them to buy more from the small units and also ensure timely payments. However, even as the CPSEs surpassed the 20 per cent procurement target from MSMEs at Rs 26,207.46 crore in FY18 out of the total procurement worth over Rs 1.15 lakh crore, the procurement from SC/ST owned enterprises remained a paltry Rs 541.8 crore.

“We have written to them (CPSEs/government departments) and requested a number of times, please visit your tender documents remove all artificial entry barriers. They should look at only two things, one is quality and the other competitive price,” MSME Secretary A K Panda told PTI. The secretary reasoned that the tendering norms for MSMEs and SC/ST owned enterprises should not be at par with others, as only 20 per cent and 4 per cent procurement is mandatory from them.

“In the tender sometimes they put artificial entry barriers like one’s previous experience. For example there is Rs 100 crore worth of total procurement, if I am an MSME I am looking at just Rs 20 crore, if I am an SC/ST owned enterprise, what they should ideally say that you should have previous experience of 4 per cent of the total tendering just to find out whether I will be able to supply that Rs 4 crore worth of order,” Panda said.

He said the revision in tendering norms is aimed at removal of artificial entry barriers, which could relate to prior experience and turnover criteria. The Secretary expressed confidence that the procurement from SC/ST owned enterprises will double to 1 per cent in the current financial year ending March 2019 and cross Rs 1,000 crore, adding that efforts were underway by the ministry to touch the 4 per cent target.

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