Union government, central PSUs step up purchases from MSMEs

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Purchases from micro and small enterprises accounted for 28.96% of the total procurement by the Union government and central public sector units this financial year, the Rajya Sabha was informed. Of the Rs 61,194 crore procurement made by central ministries, departments and PSUs till November 27 this fiscal, Rs 17,720 crore worth purchases were from micro and small enterprises, benefiting 65,920 such units, MSME minister Nitin Gadkari informed the Upper House of Parliament on Monday.

The public procurement policy stipulates that Union ministries, government departments and central Public Sector Units need to buy at least 25% of their annual purchases from micro and small enterprises. Of this 25%, 4% should be from MSEs owned by SC/ST and 3% from those owned by women. The ministry of MSME has set up an online facility, “MSME Sambandh portal”, to monitor the purchases made by the government departments and central PSUs.

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In the financial year 2018-19, the central government and PSUs together made purchases of Rs 40,434 crore from micro and small industries out of their total purchases of Rs 1,53,309 crore, accounting for 26.31% of the total procurement. In the year 2017-18, the purchases from MSEs constituted 23.11% of the total procurement by the Union government and public sector units.

MSMEs account for 29.7% of the country’s gross domestic product and 49.66% of its exports. The Narendra Modi government has initiated several steps to boost the competitiveness of MSMEs such as the Credit Linked Capital Subsidy and Technology Upgradation Scheme, Micro and Small Enterprises – Cluster Development Programme, Procurement, and Marketing Support for MSMEs to participate in trade fairs, conferences, summits and workshops.

The MSME sector is crucial for the government because of its environment potential. As per government estimates, the sector creates 4-5 lakh jobs every year when job opportunities are shrinking in the corporate and the government sectors.