Procurement policy msme


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Procurement policy msme

  1. 1. A Presentation OnPublic Procurement Policy Presented By: Narendra Kr. Bajpai Human Development & Research Society Rohan Saxena
  2. 2. Learning Objectives Definition of Procurement. Significance of Public Procurement Policy. Problems faced by MSEs in India. Role of MSME in Public Procurement Policy. When Public Procurement Policy will effected? Why Public Procurement Policy? Key features of Public Procurement Policy. Summary. Human Development & Research Society
  3. 3. PROCUREMENTProcurement is the acquisition of goods orservices. It is favorable that the goods/servicesare appropriate and that they are procured atthe best possible cost to meet the needs of thepurchaser in terms of quality and quantity,time, and location Human Development & Research Society
  4. 4. Significance of Public Procurement Policy. India’s MSME sector plays a crucial role in the socio- economic development of the country. It contributes about 8% to country’s GDP. It accounts for 45% of the country’s manufacturing output and 40% of exports. The sector employs 60 million people in 26 million units producing over 6,000 products. MSEs constitute an overwhelming majority of this sector, contributing significantly to the gross domestic product, manufacturing output, exports and employment generation. Among registered MSEs, 10.73% are owned by SC/ ST entrepreneurs, 38.7% by OBCs and 13% by Women entrepreneurs (as per IVth Census of MSMEs). Human Development & Research Society
  5. 5. Significance of Public Procurement Policy. MSEs are highly ignored to volatile market conditions. To address this inherent problem, many countries in the advanced world have put in place public procurement policies to support MSEs and to ensure a fair share of market to such entities. Human Development & Research Society
  6. 6. Problems faced by MSEs in India Although Indian MSMEs are a diverse and heterogeneous group, they face some common problems, which are briefly indicated below: • Lack of availability of adequate and timely credit; • High cost of credit; • Collateral requirements; • Limited access to equity capital; • Problems in supply to Government Departments and Agencies; Human Development & Research Society
  7. 7. Problems faced by MSEs in India • Procurement of raw materials at a competitive cost; • Problems of storage, designing, packaging and product display; • Lack of access to global markets; • Inadequate infrastructure facilities, including power, water, roads, etc.; • Low technology levels and lack of access to modern technology; • Lack of skilled manpower for manufacturing, services, marketing, etc.; Human Development & Research Society
  8. 8. Problems faced by MSEs in India • Multiplicity of labour laws and complicated procedures associated with compliance of such laws; • Absence of a suitable mechanism which enables the quick revival of viable sick enterprises and allows unviable entities to close down speedily; and • Issues relating to taxation, both direct and indirect, and procedures thereof. Human Development & Research Society
  9. 9. Role of MSME in Public ProcurementPolicy. A Review Committee has been constituted under the Chairmanship of Secretary (MSME) for monitoring and review of the Public Procurement Policy for MSEs. In addition, a ‘Grievance Cell’ would be set up in the Ministry of MSME for redressing the grievances of MSEs in Government procurement. Human Development & Research Society
  10. 10. Role of MSME in Public ProcurementPolicy. In India, the Government guidelines provide for support in marketing of MSE products through a variety of measures such as price preference, reservation of products for exclusive purchase from MSEs, issue of tender sets free of cost, exemption from payment of earnest money, etc. In practice, however, these guidelines are not being followed many Government Departments/ CPSUs, etc in true spirit. Human Development & Research Society
  11. 11. Why Public Procurement Policy? Given the present global situation of an impending or even continuing economic slowdown, creating demand within our own vast market for products produced by our own industries, would be a good buffer to ward off the negative impact. With assured public procurement, the MSE sector has only itself as a competitor among its vast variety of products. It will not only encourage better marketing strategies but also an incentive for new designs and technologies so that their produce can compete even in international markets. This will also have a stabilizing effect on market fluctuations of demand and supply and liquidity crisis. Human Development & Research Society
  12. 12. Why Public Procurement Policy? With MICRO & SMALL ENTERPRISES (MSEs) great employment generation potential, the new procurement policy will be a boost to keep generating new products with mostly locally available resources both in material and manpower. Thus with a substantial section of national economy in good spirits, government will have its hands strengthened to chalked out policies to deal with the impact of global economic crisis. Human Development & Research Society
  13. 13. The Salient features of the PublicProcurement Policy w.e.f April01,2012 are as under- Every Central Ministry/Department/PSU shall set procurement goal of minimum 20% of the total annual purchases of the products or services produced or rendered by MICRO & SMALL ENTERPRISES (MSEs). Out of 20% target of annual procurement from MSEs, a sub-target of 4% (i.e., 20% out of 20%) will be earmarked for procurement from MSEs owned by SC/ST entrepreneurs. Human Development & Research Society
  14. 14. The Salient features of the PublicProcurement PolicyThe overall target of 20% is proposed to be mademandatory at the end of 3 years.For enhancing the participation of SCs/STs in theGovernment procurement, the Central GovernmentMinistry/Department/PSUs will organise special VendorDevelopment Programmes, Buyer-Seller Meets etc.Every Central Government Ministry/Department/PSUwill report the goals set with respect to procurement to bemet from MSEs and the achievement made thereto intheir Annual Reports. Human Development & Research Society
  15. 15. The Salient features of the PublicProcurement Policy The MICRO & SMALL ENTERPRISES (MSEs) participating in a tender quoting price within the band of L1+15% may also be allowed to supply at L1 price where L1 price is from someone other than an MSE. Such MSEs may be allowed to supply up to 20% of the total tendered value. In case of more than one such MSEs, the supply will be shared equally. Human Development & Research Society
  16. 16. The Salient features of the PublicProcurement Policy The Central Ministry/Department/Public Sector Undertaking will continue to procure 358 items from MSEs, which have been reserved for exclusive purchase from them. Given their unique nature, defence armament imports will not be included in computing the 20% goal for M/o Defence. In addition, Defence Equipments like weapon systems, missiles, etc. will remain out of purview of such policy of reservation. Human Development & Research Society
  17. 17. The Salient features of the PublicProcurement Policy The policy will help to promote MSEs by improving their market access and competitiveness through increased participation by MSEs in Government purchases and encouraging linkages between MSEs and large enterprises. Human Development & Research Society
  18. 18. List of Items Reserved for Purchasefrom Micro and Small Enterprises 1. AAC/& ACSR Conductor upto 19 strands 28. Bowls 2. Agricultural Implements 29. Boxes Leather a. Hand Operated tools & implements 30. Boxes made of metal b. Animal driven implements 31. Braces 3. Air/Room Coolers 32. Brackets other than those used in Railways 4. Aluminum builders hardware 33. Brass Wire 5. Ambulance stretcher 34. Brief Cases (other than moulded luggage) 6. Ammeters/ohm meter/Volt meter (Electro magnetic upto Class I 35. Brooms accuracy) 36. Brushes of all types 7. Anklets Web Khaki 37. Buckets of all types 8. Augur (Carpenters) 38. Button of all types 9. Automobile Head lights Assembly 39. Candle Wax Carriage 10. Badges cloth embroidered and metals 40. Cane Valves/stock valves (for water fittings only) 11. Bags of all types i.e. made of leather, cotton, canvas & jute etc. 41. Cans metallic (for milk & measuring) including kit bags, mail bags, sleeping bags & water-proof bag 42. Canvas Products : 12. Bandage cloth a. Water Proof Deliver, Bags to spec. No. IS - 1422/70 13. Barbed Wire b. Bonnet Covers & Radiators Muff. to spec. Drg. Lv 14. Basket cane (Procurement can also be made from State Forest 7/NSN/IA/130295 Corpn. 43. Capes Cotton & Woollen and State Handicrafts Corporation) 44. Capes Waterproof 15. Bath tubs 45. Castor Oil 16. Battery Charger 46. Ceiling roses upto 15 amps 17. Battery Eliminator 47. Centrifugal steel plate blowers 18. Beam Scales (upto 1.5 tons) 48. Centrifugal Pumps suction & delivery 150 mm. x 150 mm 19. Belt leather & straps 49. Chaff Cutter Blade 20. Bench Vices 50. Chains lashing 21. Bituminous Paints 51. Chappals and sandals 22. Blotting Paper 52. Chamois Leather 23. Bolts & Nuts 53. Chokes for light fitting 24. Bolts Sliding 54. Chrome Tanned leather (Semi-finished Buffalo & Cow) 25. Bone Meal 26. Boot Polish 27. Boots & Shoes of all types including canvas shoes Human Development & Research Society
  19. 19. List of Items Reserved for Purchasefrom Micro and Small Enterprises 55. Circlips 86. Cotton Wool (Non absorbent) 56. Claw Bars and Wires 87. Crates Wooden & plastic 57. Cleaning Powder 88. (a) Crucibles upto No. 200 58. Clinical Thermometers (b) Crucibles Graphite upto No. 500 59. Cloth Covers (c) Other Crucibles upto 30 kgs. 60. Cloth Jaconet 89. Cumblies & blankets 61. Cloth Sponge 90. Curtains mosquito 62. Coir fibre and Coir yarn 91. Cutters 63. Coir mattress cushions and matting 92. Dibutyl phthalate 64. Coir Rope hawserlaid 93. Diesel engines upto 15 H.P 65. Community Radio Receivers 94. Dimethyl Phthalate 66. Conduit pipes 95. Disinfectant Fluids 67. Copper nail 96. Distribution Board upto 15 amps 68. Copper Napthenate 97. Domestic Electric appliances as per BIS Specifications :- 69. Copper sulphate - Toaster Electric, Elect. Iron, Hot Plates, Elect. Mixer, Grinders 70. Cord Twine Maker Room heaters 71. Cordage Others & convectors and ovens 72. Corrugated Paper Board & Boxes 98. Domestic (House Wiring) P.V.C. Cables and Wires (Aluminum) 73. Cotton Absorbent Conforming to the prescribed BIS Specifications and upto 10.00 mm 74. Cotton Belts sq. 75. Cotton Carriers nominal cross section 76. Cotton Cases 99. Drawing & Mathematical Instruments 77. Cotton Cord Twine 100. Drums & Barrels 78. Cotton Hosiery 101. Dust Bins 79. Cotton Packs 102. Dust Shield leather 80. Cotton Pouches 103. Dusters Cotton all types except the items required in Khadi 81. Cotton Ropes 104. Dyes : 82. Cotton Singlets a. Azo Dyes (Direct & Acid) 83. Cotton Sling b. Basic Dyes 84. Cotton Straps 105. Electric Call bells/buzzers/door bells 85. Cotton tapes and laces 106. Electric Soldering Iron 107. Electric Transmission Line Hardware items like steel cross bars, cross arms clamps arching horn, brackets, etc Human Development & Research Society
  20. 20. List of Items Reserved for Purchasefrom Micro and Small Enterprises 108. Electronic door bell 141. Hand Pump 109. Emergency Light (Rechargeable type) 142. Hand Tools of all types 110. Enamel Wares & Enamel Utensils 143. Handles wooden and bamboo (Procurement can also be made 111. Equipment camouflage Bamboo support from 112. Exhaust Muffler State Forest Corpn. and State Handicrafts Corporation) 113. Expanded Metal 144. Harness Leather 114. Eyelets 145. Hasps & Staples 115. Film Polythene - including wide width film 146. Haver Sacks 116. Film spools & cans 147. Helmet Non-Metallic 117. Fire Extinguishers (wall type) 148. Hide and country leather of all types 118. Foot Powder 149. Hinges 119. French polish 150. Hob nails 120. Funnels 151. Holdall 121. Fuse Cut outs 152. Honey 122. Fuse Unit 153. Horse and Mule Shoes 123. Garments (excluding supply from Indian Ordnance Factories) 154. Hydraulic Jacks below 30 ton capacity 124. Gas mantels 155. Insecticides Dust and Sprayers (Manual only) 125. Gauze cloth 156. Invalid wheeled chairs. 126. Gauze surgical all types 157. Invertor domestic type upto 5 kvA 127. Ghamellas (Tasllas) 158. Iron (dhobi) 128. Glass Ampules 159. Key board wooden 129. Glass & Pressed Wares 160. Kit Boxes 130. Glue 161. Kodali 131. Grease Nipples & Grease guns 162. Lace leather 132. Gun cases 163. Lamp holders 133. Gun Metal Bushes 164. Lamp signal 134. Gumtape 165. Lanterns Posts & bodies 135. Hand drawn carts of all types 166. Lanyard 136. Hand gloves of all types 167. Latex foam sponge 137. Hand Lamps Railways 168. Lathies 138. Hand numbering machine 169. Letter Boxes 139. Hand pounded Rice (polished and unpolished) 170. Lighting Arresters - upto 22 kv 140. Hand presses 171. Link Clip Human Development & Research Society
  21. 21. List of Items Reserved for Purchasefrom Micro and Small Enterprises 172. Linseed Oil 203. Paper Tapes (Gummed) 173. Lint Plain 204. Pappads 174. Lockers 205. Pickles & Chutney 175. Lubricators 206. Piles fabric 176. L.T. Porcelain KITKAT & Fuse Grips 207. Pillows 177. Machine Screws 208. Plaster of Paris 178. Magnesium Sulphate 209. Plastic Blow Moulded Containers upto 20 litre excluding Poly 179. Mallet Wooden Ethylene 180. Manhole covers Terphthalate (PET) Containers 181. Measuring Tapes and Sticks 210. Plastic cane 182. Metal clad switches (upto 30 Amps) 211. Playing Cards 183. Metal Polish 212. Plugs & Sockets electric upto 15 Amp 184. Metallic containers and drums other than N.E.C. (Not elsewhere 213. Polythene bags classified) 214. Polythene Pipes 185. Metric weights 215. Post Picket (Wooden) 186. Microscope for normal medical use 216. Postal Lead seals 187. Miniature bulbs (for torches only) 217. Potassium Nitrate 188. M.S. Tie Bars 218. Pouches 189. Nail Cutters 219. Pressure Die Casting upto 0.75 kg 190. Naphthalene Balls 220. Privy Pans 191. Newar 221. Pulley Wire 192. Nickel Sulphate 222. PVC footwears 193. Nylon Stocking 223. PVC pipes upto 110 mm 194. Nylon Tapes and Laces 224. PVC Insulated Aluminium Cables (upto 120 sq. mm) (ISS:694) 195. Oil Bound Distemper 225. Quilts, Razais 196. Oil Stoves (Wick stoves only) 226. Rags 197. Pad locks of all types 227. Railway Carriage light fittings 198. Paint remover 228. Rakes Ballast 199. Palma Rosa Oil 229. Razors 200. Palmgur 230. RCC Pipes upto 1200 mm. dia 201. Pans Lavatory Flush 231. RCC Poles Prestressed 202. Paper conversion products, paper bags, envelops, Ice-cream 232. Rivets of all types cup, paper cup and saucers & paper Plates 233. Rolling Shutters Human Development & Research Society
  22. 22. List of Items Reserved for Purchasefrom Micro and Small Enterprises 234. Roof light Fittings 265. Socket/pipes 235. Rubber Balloons 266. Sodium Nitrate 236. Rubber Cord 267. Sodium Silicate 237. Rubber Hoses (Unbranded) 268. Sole leather 238. Rubber Tubing (Excluding braided tubing) 269. Spectacle frames 239. Rubberised Garments Cap and Caps etc 270. Spiked boot 240. Rust/Scale Removing composition 271. Sports shoes made out of leather (for all Sports games) 241. Safe meat & milk 272. Squirrel Cage Induction Motors upto and including 100 KW440 242. Safety matches volts 3 243. Safety Pins (and other similar products like paper pins, staples phase pins 273. Stapling machine etc.) 274. Steel Almirah 244. Sanitary Plumbing fittings 275. Steel beds stead 245. Sanitary Towels 276. Steel Chair 246. Scientific Laboratory glasswares (Barring sophisticated items) 277. Steel desks 247. Scissors cutting (ordinary) 278. Steel racks/shelf 248. Screws of all types including High Tensile 279. Steel stools 249. Sheep skin all types 280. Steel trunks 250. Shellac 281. Steel wool 251. Shoe laces 282. Steel & aluminium windows and ventilators 252. Shovels 283. Stockinet 253. Sign Boards painted 284. Stone and stone quarry rollers 254. Silk ribbon 285. Stoneware jars 255. Silk Webbing 286. Stranded Wire 256. Skiboots & shoes 287. Street light fittings 257. Sluice Valves 288. Student Microscope 258. Snapfastner (Excluding 4 pcs. ones) 289. Studs (excluding high tensile) 259. Soap Carbolic 290. Surgical Gloves (Except Plastic) 260. Soap Curd 291. Table knives (Excluding Cutlery) 261. Soap Liquid 292. Tack Metallic 262. Soap Soft 293. Taps 263. Soap washing or laundary soap 294. Tarpaulins 264. Soap Yellow 295. Teak fabricated round blocks Human Development & Research Society
  23. 23. List of Items Reserved for Purchasefrom Micro and Small Enterprises 296. Tent Poles 325. Waxed paper 297. Tentage Civil/Military & Salitah Jute for Tentage 326. Weighing Scale 298. Textiles manufacturers other than N.E.C. (not elsewhere 327. Welded Wiremash classified) 328. Wheel barrows 299. Tiles 329. Whistle 300. Tin Boxes for postage stamp 330. Wicks cotton 301. Tin can unprinted upto 4 gallons capacity (other than can 331. Wing Shield Wipers (Arms & Blades only) O.T.S.) 332. Wire brushes and Fibre Brushes 302. Tin Mess 333. Wire Fencing & Fittings 303. Tip Boots 334. Wire nails and Horse shoe nails 304. Toggle Switches 335. Wire nettings of gauze thicker than 100 mesh size 305. Toilet Rolls 336. Wood Wool 306. Transformer type welding sets conforming to IS:1291/75 (upto 337. Wooden ammunition boxes 600 amps) 338. Wooden Boards 307. Transistor Radio upto 3 band 339. Wooden Box for Stamps 308. Transistorised Insulation - Testers 340. Wooden Boxes and Cases N.E.C. (Not elsewhere classified) 309. Trays 341. Wooden Chairs 310. Trays for postal use 342. Wooden Flush Door Shutters 343. Wooden packing cases all sizes 311. Trolley 312. Trollies - drinking water 344. Wooden pins 313. Tubular Poles 345. Wooden plugs 314. Tyres & Tubes (Cycles) 346. Wooden shelves 347. Wooden veneers 315. Umbrellas 316. Utensils all types 348. Woollen hosiery 317. Valves Metallic 349. Zinc Sulphate 318. Varnish Black Japan 350. Zip Fasteners 319. Voltage Stablisers including C.V.Ts 320. Washers all types 321. Water Proof Covers 322. Water Proof paper 323. Water tanks upto 15,000 litres capacity 324. Wax sealing Human Development & Research Society
  24. 24. List of Items Reserved for Purchasefrom Micro and Small Enterprises HANDICRAFT ITEMS Sl.No. Item Description 351 Cane furniture 352. Bamboo file tray, Baskets, Pencil stand, side racks etc. 353. Artistic Wooden Furniture 354. Wooden paper weight, racks etc. 355. Glass covers made of wood and grass jute. 356. Jute furniture 357. Jute bags, file cover 358. Woollen & silk carpets. Human Development & Research Society
  25. 25. SUMMARYThe Union Cabinet approved a procurement policy asking thegovernment departments and public sector undertakings(PSUs) to give preference to micro and small entrepreneurs(MSEs), including those belonging to SC/ST entrepreneurs,while making purchases.As per the Public Procurement Policy for goods produced andservices rendered by MSEs by the Centralministries/departments/PSUs to be notified under Sec. 11 ofthe Micro, Small and Medium Enterprises Development(MSMED) Act, 2006, all Central ministries and PSUs willhave to ensure that a minimum 20% of all their total annualpurchases of products or services are from MSEs. And withinthis limit, 4% of the orders should be placed to the SC/STentrepreneurs. Human Development & Research Society
  26. 26. SUMMARY“But, given their unique nature, defence armament importswill not be included in computing the 20% goal for theMinistry of Defence. In addition, defence equipment such asweapon system remains out of the purview of such policy forreservation.”However, the procurement policy would be voluntary in naturefor three years and made mandatory after that i.e. After itbecomes mandatory, non-conforming departments will berequired to provide reasons for not meeting the targets to areview committee. Human Development & Research Society
  27. 27. SUMMARYThe Central ministries/PSU will continue to procure 358 itemsfrom MSEs, which have been reserved for exclusive purchasefrom them. A committee has been constituted under thechairmanship of Secretary (MSME), to review the list of 358items reserved for exclusive purchase from MSEs on acontinuous basis and for monitoring and review of the PublicProcurement Policy for MSEs. In addition, a ‘Grievance Cellwould be set up in the Ministry of MSME for redressing thegrievances of MSEs in government procurement. Human Development & Research Society
  28. 28. SUMMARYAccording to Micro, Small and Medium Enterprises(MSME) Ministry “PSUs are expected to buy goodsworth Rs.35,000 crore from the MSEs, of which abusiness of Rs.7,000 crore would go to the SCs/STs.The policy will help to promote MSEs by improvingtheir market access and competitiveness throughincreased participation by MSEs in governmentpurchases and encouraging linkages between MSEsand large enterprises.” Human Development & Research Society
  29. 29. Avenue for Increased Consumption ofMSME Products The clearance of the public procurement policy will offer a much needed and less optimally used avenue for increased consumption of MSME products by government departments and PSUs. More importantly, it will signal a message of confidence and faith in the potential and capabilities of the MSME sector. In India, public sector units procuring a percentage of their goods from MSMEs was not mandatory, but this policy would help transform the authorities’ mindset that goods manufactured by micro, small and medium enterprises are good enough for public sector undertakings and the government. India Engineering Sourcing Show 2012 – Your First Step to benefit of New Procurement Policy To provide Indian MSEs a live platform to offer their products & services to PSUs, Ministry of Commerce & Industry, Govt. of India with EEPC India as lead agency, is organizing India’s largest Engineering Sourcing Show (IESS) at Mumbai during 22-24 March 2012. So, be proactive and have your share in 20% of procurement requirements of state departments & PSUs. IESS 2012 provides you the opportunity to meet face to face with these PSUs and list yourself in their vendors list or increase your total sales to them. Human Development & Research Society
  30. 30. Thank You Human Development & Research Society