The Government e-Marketplace (GeM) stands as a transformative platform, revolutionizing government procurement in India. Among its various features, the Micro and Small Enterprises (MSE) Purchase Preference holds a significant place, emphasizing the government's commitment to empowering small businesses.
In this blog post, we'll delve into the essence of MSE Purchase Preference on GeM, its objectives, and how it contributes to fostering a more inclusive and vibrant business environment.
What is MSE?
MSE stands for Micro and Small Enterprises. The term "Micro and Small Enterprises" is commonly used in the context of business classifications and government policies related to small-scale industries.
The classification of Micro, Small, and Medium Enterprises (MSMEs) is based on investment in plant and machinery or equipment and turnover. These criteria are as follows:
| Micro Enterprises | Small Enterprises | Medium Enterprises |
|---|---|---|
| Investment in plant and machinery or equipment does not exceed INR 1 crore | Investment in plant and machinery or equipment does not exceed INR 10 crores | Investment in plant and machinery or equipment is more than INR 10 crores but does not exceed INR 50 crores |
| Turnover does not exceed INR 5 crores | Turnover is more than INR 5 crores but does not exceed INR 50 crores | Turnover is more than INR 50 crores but does not exceed INR 250 crores |
Source: https://msme.gov.in/know-about-msme
How to register for MSE?
Any person who wants to register for Micro Small Enterprises may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof. Registration process is Free of Cost. You can only register through the official website of Udyam Registration Govt of India.
Public Procurement Policy for MSEs
Public Procurement Policy for MSEs Order, 2018 has been notified under section 11 of MSMED Act, 2006. Public Procurement Policy for Micro and Small Enterprises (MSE) refers to the preferential treatment given to MSEs (Micro and Small Enterprises) in the procurement processes of government entities.
This preferential treatment is aimed at promoting and supporting the growth of MSEs by providing them with certain advantages during the procurement process.
- No tender fee
- EMD exemption
- Relaxation from prior experience
- Relaxation in prior turnover
- Purchase preference
Key features
Key features of public procurement for MSEs includes:
- 25% share of the total annual procurement by Central Government Ministries / Departments / Public Sector Undertakings is to be made from MSEs.
- Out of the 25% target of annual procurement from MSEs (Not in the specific tender), a sub-target of 4% (within the 25%) of annual procurement from MSEs is earmarked for procurement from MSEs owned by Scheduled Caste (SC) / Scheduled Tribe (ST) entrepreneurs and 3% (within the 25%) of annual procurement from MSEs is earmarked for procurement from MSEs owned by women entrepreneur
- 358 items are reserved for exclusive procurement from MSEs.1
Eligibility Criteria for purchase preference on GeM
To avail of Purchase Preference on GeM, bidders must adhere to specific eligibility criteria:
- Goods: The bidder must be a manufacturer of the offered goods or primary products in case of a bunch bid.
- Services: The bidder must be a service provider for the offered service.
- OEM or Service Provider: Bidder or Service provider must have registered with the organization as mentioned in the policy or have an Udyam Registration Certificate.
MSE purchase preference on GeM
If the buyer has selected the MSE purchase preference then purchase preference will be given to MSEs as defined in Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 dated 23.03.2012.
Check if a GeM bid has MSE Purchase Preference?
In order to check the purchase preference for MSE in the GeM Bid, you can download the GeM Bid document and look for the "MSE Purchase Preference" option. If the buyer has selected to give purchase preference to MSEs, you can see "Yes" as shown in the below image.
MSE details on GeM profile
Sellers need to update their MSE details in their GeM seller profile. You can find detailed steps in this guide. https://www.edafter.com/docs/seller-profile/business-profile/msme
Bid participation as MSE
At the time of bid or RA participation, sellers must select and upload MSE category certificate in order to avail of purchase preference in that particular bid or RA.
If you are not allowed to select YES in the MSE option, it means you aren't an OEM of the product you are participating in.
Matching L-1 Price
If the Lowest Bidder (L-1) is not an MSE, and MSE sellers have quoted prices within L-1 plus a 15% margin, these MSE sellers are given the opportunity to match the L-1 price. Sellers are requested to navigate to this post in order to learn how to accept Price Match Accept requests on the GeM Portal.
Contract allocation
Contracts will be awarded to MSE sellers for a minimum of 25% percentage (as determined by the buyer) of the total quantity, creating a balanced approach that considers both the L-1 bidder and MSE sellers.
The Buyer can split the Bid with MSE Purchase Preference among maximum 5 MSE Sellers.
Top 5 MSE price offerings, within L1+15%, would be given the option to match L1 price. If eligible MSEs don't accept the price match accept, then bid would be awarded to the remaining eligible MSEs who have matched their price with L1 offer.
Conclusion
Purchase Preference on GeM serves as a strategic tool to support the growth and sustainability of Micro and Small Enterprises. By promoting the participation of MSEs in government procurement, GeM contributes to economic inclusivity, job creation, and innovation. As policies and guidelines evolve, GeM continues to play a vital role in shaping a fair and competitive marketplace that benefits both buyers and MSE sellers.
- Full Item List can be found here: https://upload.indiacode.nic.in/showfile?actid=AC_CEN_46_77_00002_200627_1517807324919&type=order&filename=s.o._581_(e).pdf↩