Public Procurement Policy For MSMEs Likely This Week, New Public Procurement Policy, Public Procurement Policy For MSMEs, Public Procurement Policy in India

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Namrata Kath Hazarika | 08 Jun, 2010
The new public procurement policy, which will make it mandatory for ministries and Public Sector Units (PSUs) to procure 20 percent of their annual purchase volume from micro and small enterprises (MSEs), will be finalized and placed before the cabinet by the end of this week, said Secretary, Ministry of MSME, Dinesh Rai on Tuesday.

"We have been able to convince the Commerce Ministry and its team on the procurement policy. Now, we have to talk to the home ministry on the issue," Rai said speaking on the sidelines of a FICCI conference on "Global Competitiveness in Manufacturing: Prospects & Strategies for Indian Manufacturing" in New Delhi.

He said the MSME ministry have been able to sort out the issues with defence ministry and expects that the final discussion papers would be put before the cabinet by this week itself.

Earlier, the Ministry of Micro, Small and Medium Enterprises had compiled a draft public procurement policy (PPP), and circulated a Cabinet note proposing that at least 20 percent of the government and purchases of the public sector units be sourced from small and medium enterprises. However, the idea was opposed by some ministries including the ministries of home, petroleum and commerce, and the PSUs under them, as they doubted the quality of products from MSME units.

The MSME share of estimated annual procurements, worth over Rs 1,70,000 crore, is now a mere 5 percent, or Rs 8,500 crore. It is expected if the government accepts the recommendation, MSMEs can have a potential Rs 34,000 crore slice of the overall purchases, including those made by public sector companies.