Public procurement from micro and small enterprises (MSEs) in India has witnessed a remarkable surge in the first half of FY26, touching ₹1 trillion on the GeM portal and ₹38,000 crore via the MSME Sambandh platform. This accounts for approximately 45% of total government procurement—nearly double the mandatory 25% threshold—highlighting the growing inclusion of MSEs in the public procurement ecosystem.
Policy Reforms Drive MSE Inclusion
A key factor contributing to this surge is the government’s recent amendment to the MSME classification criteria. At the beginning of FY26, investment and turnover limits for MSMEs were revised upwards—a 2.5x increase in permissible plant and machinery investment and a 2x increase in turnover thresholds. As a result, more high-value businesses now qualify as MSEs and are eligible to participate in government tenders.
Under the revised definition:
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Micro enterprises can now invest up to ₹2.5 crore (from ₹1 crore earlier) and report up to ₹10 crore in turnover.
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Small enterprises are classified with investment under ₹25 crore and turnover up to ₹100 crore.
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Medium enterprises are eligible with investment up to ₹125 crore and turnover up to ₹500 crore.
Government Boosts Procurement as MSEs Face Export Headwinds
With global trade uncertainties and a dip in exports, the government has become a key buyer for the country’s 65 million-strong MSE base, which contributes around 45% of India’s exports. While experts agree that government procurement plays a stabilising role, they caution that large private sector buyers must also ramp up sourcing from domestic MSMEs to ensure sustainable growth.
The procurement share from MSEs rose from 28% in FY21 to 44% in FY24, though it dipped slightly to 35% in FY25. The current year’s trend signals a rebound, supported by expanded eligibility and growing awareness of procurement platforms.
Looking ahead, stakeholders expect procurement volumes to rise further in H2 FY26 due to increased budget disbursements and deliveries.