The Government e-Marketplace (GeM), India’s premier public procurement portal, witnessed a remarkable 205% year-on-year increase in the value of services procured from Micro, Small, and Medium Enterprises (MSMEs) in the financial year 2023-24. Recent data shared by GeM underscores the significant strides made in promoting MSME participation in public procurement.
Unprecedented Growth in Service Procurement
In a recent social media announcement, GeM highlighted that the gross merchandise value (GMV) of services on its platform soared to an unprecedented Rs 2.07 lakh crore. This figure represents nearly 50% of the total GMV of the portal for the fiscal year.
The surge in service procurement was driven by the introduction of 36 new service categories, increasing the total number of listed services to 320. These new categories, coupled with the existing 11,926 product categories, have enabled the platform to cater to the dynamic needs of government buyers across various levels of administration.
“The platform is well-equipped to cater to all the dynamic needs of government buyers across levels of administration!” GeM stated.
Total Order Value Surpasses Expectations
GeM’s overall operations have seen an upward trajectory, with the total order value, or GMV, leaping to Rs 4.03 lakh crore in FY24. This marks more than a doubling from the Rs 2.01 lakh crore recorded in the previous fiscal year.
The substantial increase in GMV was driven by heightened demand for goods and services from various government departments and central public sector enterprises (CPSEs). As of June 14, 2024, GeM’s GMV stood at Rs 1.01 lakh crore, with over 8 lakh orders facilitated. Notably, 41% of these orders were attributed to micro and small enterprises, highlighting the critical role of MSMEs in the public procurement ecosystem.
Enhanced Participation and Benefits for MSEs
The value of overall procurement from Micro and Small Enterprises (MSEs) by CPSEs also hit a new high in FY24, reaching Rs 75,253 crore. This represents a 16.2% increase from the Rs 64,721 crore recorded in FY23. The share of purchases from MSEs stood at 35.6%, benefiting 2.18 lakh enterprises. This is slightly lower compared to the 37.1% share involving 2.36 lakh enterprises in the previous fiscal year.
According to the government’s procurement policy, CPSEs are mandated to procure at least 25% of their total procurement value from MSEs annually. Additionally, 4% of this procurement must come from MSEs owned by Scheduled Caste/Scheduled Tribe entrepreneurs, and 3% from MSEs owned by women entrepreneurs.
Also read: State Bank of India Launches SME Digital Business Loans
Driving Factors Behind the Surge
Several factors have contributed to the significant growth in MSME services procurement on GeM. The introduction of new service categories has expanded the range of services available to government buyers, facilitating greater participation from MSMEs. The platform’s ability to cater to diverse and evolving needs has made it a preferred choice for procurement.
Furthermore, the increase in the overall GMV of GeM can be attributed to the proactive approach of government departments and CPSEs in leveraging the platform for their procurement needs. The government’s emphasis on promoting MSME participation through policy measures and incentives has also played a pivotal role.
Looking Ahead: Sustaining Growth and Enhancing Efficiency
As GeM continues to evolve, sustaining the growth momentum in MSME procurement will require ongoing efforts to streamline processes and enhance user experience. The introduction of new service categories should be accompanied by measures to simplify procurement procedures and reduce compliance burdens for MSMEs.
Moreover, the government should continue to promote awareness about the benefits of GeM among MSMEs, particularly in rural and underserved areas. Providing training and support to MSMEs to navigate the platform effectively will be crucial in ensuring their continued participation and success.
The integration of technology to improve the efficiency and transparency of procurement processes is another key area of focus. Leveraging data analytics and artificial intelligence can help identify trends, optimize procurement strategies, and ensure timely delivery of goods and services.
Conclusion
The remarkable growth in MSME services procurement on GeM reflects the platform’s success in fostering an inclusive and dynamic public procurement ecosystem. With continued support and strategic initiatives, GeM is poised to further enhance its role in driving economic growth and empowering MSMEs across India.
As the government and stakeholders work together to address challenges and seize opportunities, the future of public procurement through GeM looks promising. The platform’s commitment to innovation and inclusivity will undoubtedly contribute to the overall development and prosperity of the MSME sector in India.
By fostering a more efficient and transparent procurement process, GeM is not only benefiting MSMEs but also ensuring that government departments and CPSEs have access to a diverse range of high-quality goods and services. This collaborative approach will be instrumental in achieving the broader goals of economic development and social progress in India.
GeM’s journey of transformation is a testament to the power of digital platforms in revolutionizing traditional procurement practices. As it continues to evolve and adapt to the changing needs of its users, GeM will play a crucial role in shaping the future of public procurement in India.