PMO-Backed Purchase Plan From MSMEs Hits Roadblock, Compulsory Government Procurement For MSMEs, PMO-Backed Plan For Compulsory Government Procurement For MSMEs, PMO Plan For Compulsory Government Procurement

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SME Times News Bureau | 28 May, 2010
The PMO-backed plan for compulsory government procurement from micro, small and medium enterprises (MSMEs) hit a road-block with three ministries opposing the move, a top level source told a news agency.

The micro, small and medium enterprise (MSME) ministry would be calling an inter-ministerial meeting in the next 10 days to "sort out the apprehensions," the source said in New Delhi on Thursday, adding the ministries of home, petroleum and commerce, and the PSUs under them are opposed to the idea, as they doubt the quality of products from MSME units.

The Union Ministry for MSME had recently circulated a Cabinet note proposing the Centre to ensure that all government departments, public sector undertakings and government-funded infrastructure projects procure at least 20 percent of their requirements from MSMEs.

A task force, chaired by Prime Minister's principal secretary TKA Nair, was constituted to address the issues of the the MSME sector which submitted its report in January and made various recommendations including compulsory procurement policy for MSMEs which should also get easy bank credit.

"The home ministry has raised concerns whether SMEs can match the quality benchmarks of its purchases," the source was quoted by a news agency.

The source further pointed out that while the ministries of commerce and petroleum and the PSUs under their control meet bulk of their requirements from imports, the ministries of defence and railways have assured the MSME ministry that they will support the policy at least for the non-strategic purchases.

There are 2.6 crore MSME units in the country out of which 1.86 crore are in the services space. The MSME sector, which was hit-hard due to the recent global financial meltdown, contributes 8 percent to GDP, 45 percent of the manufactured output and 40 percent of exports.