GOI has approved a new procurement policy

Tuesday 01 November, 2011.

Small units, SCs/STs to get preference in govt purchases The government on Tuesday approved a procurement policy under which state-run departments and PSUs will give preference to micro and small entrepreneurs (MSEs), including those belonging to SCs/STs.  The "path-breaking" policy cleared by the Cabinet, ahead of assembly elections in five states including Uttar Pradesh next year, will set an annual target of 20 per cent procurement for the Central Government departments and PSUs from MSEs. Within this limit, four per cent of the orders should be placed to the SC/ST entrepreneurs and 16 per cent for others. "But, given their unique nature, defence armament imports will not be included in computing the 20 per cent goal for Ministry of Defence. In addition, defence equipment like weapon system remain out of purview of such policy for reservation," according to an official statement. Briefing reporters after the Cabinet meeting, Information and Broadcasting Minister Ambika Soni described the decision as "path-breaking". It was also in line with the "Congress manifesto", she said. However, the procurement policy would be voluntary in nature for three years. It would be made mandatory after three years. After it becomes mandatory, non-conforming departments will be required to provide reasons for not meeting the targets to a Review Committee. Elaborating, Micro, Small and Medium Enterprises (MSME) Minister Virbhadra Singh said with announcement of the new policy, PSUs are expected to buy goods worth Rs 35,000 crore from the MSEs, of which a business of Rs 7,000 crore would go to the SCs/STs. Also, PSUs and government departments would be required to report the goals set with respect to procurement to be met from small units and the achievement made in their respective annual reports. The MSMEs, which account for 45 per cent of the country's manufacturing output and 40 per cent of exports, have also been hit by the rising input cost and interest rates. The sector employs 60 million people in 26 million units producing over 6,000 products.(ST-01/11)