Ease of Doing Business for MSMEs: In November 2020, Commerce Minister Piyush Goyal tweeted about how the Government e-Marketplace (GeM) has played an vital part in catalysing the development of MSMEs, advertising ladies entrepreneurship, and enabling startups to attain out to government purchasers. The minister had referred to the Government e-Marketplace, or GeM, as the central government’s version of Amazon or Flipkart, particularly made to facilitate on-line procurement of frequent goods and services necessary by numerous government departments, organisations, and PSUs.
The platform now hosts more than 21.7 lakh sellers, of which more than 7 lakh are micro, modest and medium enterprises (MSMEs). Goyal pointed to the 88 per cent rise in order volumes, up from 26.2 lakh as of 01 November 2019 to 49.4 lakh by 01 November 2020. The information, captured in the throes of the pandemic, is specifically symbolic. According to numbers shared by the Ministry of Commerce & Industry, the GeM portal has facilitated more than 67 lakh orders worth Rs 1,11,113 crore considering the fact that its inception.
GeM and MSMEs
Launched in August 2017, the Government e-Marketplace aims to provide efficiency, transparency, and inclusiveness in public procurement. With tools such as eBidding, Reverse Auction, and Direct Procurement, the platform enables MSMEs to sell straight to the government. In June 2020, the portal announced the choice to onboard more solutions by tribal communities, craftsmen, handicraft artisans, weavers, self-enable groups, and MSMEs to make the platform more inclusive.
In truth, for the duration of the pandemic, GeM was instrumental in advertising Covid associated essentials. It developed a separate section for Covid categories, implemented new processes to tide more than logistical hurdles, and prioritised approvals of solutions in this segment. By February 2021, there have been more than 183,148 solutions and 36,650 sellers below Covid categories. Suppose the GeM could allow more orders, i.e., enhance demand for the duration of one of India’s toughest financial scenarios, the platform can grow to be a supply of untapped prospective to enable MSMEs earn more for the duration of significantly less turbulent instances.
Traditional hurdles in public procurement
The unorganised and fragmented structure of the present tendering and procurement program across central and state government departments leaves a lot of area for compromises and bias. Additionally, government departments and PSUs need to come out of their normal comfort zone of inviting tenders and going by way of cumbersome documentations. It has been reported that quite a few government departments and PSUs have been either reluctant or bypassing GeM even though procuring products.
A transform in attitude and mindset can not be effected overnight. The government can believe about schemes that encourage and incentivise departments to embrace technologies in procurements and payments. It has also been reported that according to a Personnel Ministry order, GeM utilisation will be reflected on the Annual Performance Appraisal Reports of IAS and IPS officers. While such measures can definitely increase accountability amongst bureaucrats, the government can believe of more actions in line with rewards and a sense of inclusion at decrease levels.
Ensuring transparency, more quickly payment
The sector representatives of the MSME sector have lengthy complained about the late clearance of dues even though dealing with government departments. The delay in payment is more than 60 days in some instances. As per trusted government sources, the challenge is not the shortage of funds in most instances. The lack of technological integration even though settling the payment cycle and adhering to some decades-old protocols that may possibly have outlived their relevance adds to the waiting period ahead of dues are lastly cleared.
Non-clearance or late payment of dues hurt MSMEs as they go by way of a by no means-ending cycle of shortage of funds. Moreover, raw material charges can broadly fluctuate amongst the payment cycles. As a outcome, MSMEs generally come across it tough to scale up their small business. MSMEs also come across it tough to access info concerning procurements and orders out there with numerous government departments. This can deny new and promising firms a level playing field against established contractors.
The government decided to levy interest on late payments to vendors on GeM with impact from 1 October 2020. Furthermore, purchasers on GeM are necessary to make payments inside 10 days right after the generation of the Consignee Receipt and Acceptance Certificate (CRAC). If strictly implemented, this will go a lengthy way in making sure speedy collection of payments for MSMEs. MSMEs, in turn, would be encouraged to bid aggressively for bagging more government orders and fulfilling them.
The government has directed its departments not to give excuses such as urgency, technical exemptions, poor net connection, or portal server down even though procuring goods and services elsewhere. Furthermore, The GeM Availability Report and Past Transaction Summary (GeMARPTS) ID was made compulsory for government procurements made outdoors the GeM. Such measures send out a positive sign to MSMEs that the government is seriously working towards properly addressing their difficulties. However, outcomes can only be visible if they are implemented strictly and regularly across all government departments.
Roadblocks
Any work to streamline the current process and bring transparency in the government program has met a particular degree of resistance in India. Back in the early 90s, the dematerialisation of shares and the introduction of the National Stock Exchange as an option to the Bombay Stock Exchange also met resistance. However, these actions played a critical part in the development of the Indian economy in successive decades.
GeM and other digital initiatives are no unique. Any new initiative is greeted with the psychological worry of the unknown. Change can in some cases come in the kind of a perceived sense of chaos. It is heartening to see that the government has shown conviction and resolve in implementing GeM. The will need of the hour is that the whole government machinery shreds off any achievable reservations or complacencies concerning the acceptance of new initiatives. The concept is to go mainstream in government procurements by way of GeM rather than just fulfilling the bare minimum needs to realize the numbers.
Regardless of previous reservations and snags in the GeM implementation, the policy continues to have far-reaching implications for the economy. It’s not just a platform for on-line procurement – it aids in standardisation and ease of undertaking small business with the government. It also acts as an impetus for ‘Digital India’, ‘Make in India’, and other such initiatives. With continuous improvements and fine-tuning, GeM has evolved as a robust, crucial, and effective avenue for the huge MSME base in the nation. Its introduction of Natural Language Processing, sophisticated analytics applying artificial intelligence and machine understanding, and more quickly processing of approvals and payments need to allow MSMEs to earn more in the future.
(R Narayan is the President at FICCI-CMSME and Founder & CEO at Power2SME. Views expressed are the author’s personal.)