Incentives for MSMEs to participate in government procurement in Maharashtra state

Incentives for MSMEs to participate in government procurement in Maharashtra state

Incentives for MSMEs to participate in government procurement in Maharashtra state

Micro, Small and Medium Sized Enterprises (MSME) are a key pillar in an economy. All governments world-wide take efforts to encourage the growth of MSMEs. A key underlying fact is that the large enterprises of today were once a MSME. In this time and age, MSMEs find it all the more challenging to compete against the large, well-established enterprises. To enable the MSMEs to compete on par with the established enterprises, many governments develop policies to support the MSMEs. This article details the support extended by the Maharashtra Government to catalyze participation of MSMEs in government tenders. By definition provided by the Union Ministry of Government of India, effective 13th May 2020, Manufacturing and services unit with up to 10 Crores is termed as a Micro enterprise and the units with up to a turnover of INR 250 crores is termed as a Medium enterprise.

MSME 

The Department of Industry, Energy and Labour published a manual of office procedures for procurement by the government departments. This manual was enacted on the 1st of December 2016. In serial number 15 of the manual, the government agencies are restricted to procure a set of 241 products only from MSMEs. This list of products is provided in Appendix-17, in the manual and it included products such as Asphalt Boiler, Ammeter, Grease nipples and glue. 

 

Typically, bidders are required to pay a tender form fee and Earnest Money Deposit (EMD) to participate in government tenders. The tender fee in Maharashtra can vary in the range of 1000 - 10,000 Rs, which is non-refundable. Earnest Money Deposit (EMD) is usually computed as a percentage of the estimated value of the contract, estimated at 1 - 2% of the tender value. Though EMD is refundable, it is usually held by the government for at least a couple of months. In such a case, the cash flow of the business gets blocked. 

 

As per the procurement manual, businesses registered under the Micro, Small and Medium Enterprises development act 2006 are exempted from paying EMD and tender fee while participating in tenders published by the government agencies in Maharashtra. Besides the above, the manual provides for 20% quantity reservation for items not included in the reserved product list. However, the MSMEs will be eligible to get this benefit provided they manufactured the product. 

 

It is recommended that the MSMEs gain awareness and avail the incentives by participating in the tenders advertised by the government agencies in Maharashtra. The latest list of Maharashtra tenders is available in the Tendersniper portal. 

Tendersniper

Tendersniper consolidates and provides tender information published by State and Central government agencies in India. The businesses seeking to participate in Government tenders can register in Tendersniper to receive customized notification about the latest tender alerts. Tendersniper is created and managed by GUGA IT Services Private Ltd., an entity registered in India.

Interesting Facts

  The GDP of Karnataka is in excess of INR 20 Trillion during the years 2022 and 2023. When procurement is estimated at 10% of the GDP, it amounts to INR 2 Trillion. The procurement in the State is governed by a transparency in public procurement act. Hence, most of the procurement funded under the state budget is advertised in the KPPP portal. Besides the State's budget funds, many central government agencies such as Hindustan Aeronautics Limited have their offices in Karnataka. They advertise procurement in their respective web-site and e-Tendering portals. The tenders published in hundreds of portals and web-sites pertaining to the Karnataka state are consolidated in this web page.