This is surely going to bring about a wide smile on the faces of MSME owners!
The Ministry of MSME, Government of India, has announced a Public Procurement Policy (PPP) which makes it mandatory for all the ministries and Public Service Units (PSUs) to procure 20% of their total purchase from MSMEs.
Until now, the government procured a meager volume of 4 to 5 percent from MSMEs, out of its total purchase. Unlike many other countries, where the public procurement share from SMEs is at a good position, Indian MSMEs have always faced disappointment due to lack of government support. Out of many recommendations proposed to the government last year, for the benefits of the MSMEs, the 20% PPP is the first one to be presented to the Cabinet for approval.
According to Madhav Lal, Additional Secretary and Development Commissioner, Ministry of MSME, the ministry is on its last minute consultation with the concerned PSUs and other ministries. “The proposed policy will make it mandatory for ministries and PSUs to procure 20 per cent of their annual purchase volume from MSMEs and report the procurement made from MSMEs in their annual reports”, stated Mr. Lal.
The MSME associations are a happy family after the announcements as they have been demanding some reservation in public procurement since long. India has a vast public procurement which allows huge growing potential. And with big sectors like railways, defence, power, manufacturing and transport etc in the public sector, the recommended 20% PPP is surely going to boost the business prospects of the Indian MSMEs.
Apart from that, the Confederation of Indian Industry (CII) has also made a similar announcement. “In a financial year, in case the large industry (private and public sector) procures stipulated percentage of goods/ services from MSMEs and subject to the transaction having been completed in the form of payment to MSMEs, the large industry would be entitled to certain tax benefits. This would also facilitate the growth progression and upgradation of the vendors,” said Salil Singhal, chairman of CII's National MSME Council.
Ecstatic on hearing the announcements, Mr. Dinesh Agarwal, Founder & CEO, IndiaMART.com, commented, “It's better late than never! Though the government took a long time to pay heed to an important pain area of the MSMEs, I welcome the decision as it eventually proposes a huge growth opportunity to them. Apart from marketing and matchmaking platforms like ours, MSMEs also need government support to grow.”
Glad with a commendable gesture like this, lets expect some continuous support from the government for the small industries.
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