Indian Government exempts startups from prior experience in public procurement

The Department of Expenditure has issued a directive to all ministries stating that all startups will now be exempted from the prior experience criteria in public procurement, reports The Economic Times.

Till date, only micro and small enterprises were eligible to avail this benefit. The Government will now relax certain criteria, which will help startups in participating in the tendering process. This new step will offer an equal opportunity to startups, especially the ones from the manufacturing sector which can participate in the conventional tendering process and avail opportunities. This step has surely unveiled more scope for startups operating in this sector.

However, while the small and micro enterprises covered by the Public Procurement Policy for MSE order 2012 are mentioned, the directive fails to define the term 'startup' in this context. Earlier, in the startup action plan, a startup was defined as one with a turnover of less than Rs 25 crore and not older than 5 years, measured from its incorporation date.

A medium enterprise operating in the manufacturing sector, according to definition, should have more than Rs 5 crore in investment but shouldn't exceed Rs 10 crore in equipment. One in the services sector, should have an investment between Rs 2 crore to Rs 5 crore.

Earlier this year, the Government had also mandated that the central government departments and ministries, along with its central PSUs, procure at least 20 percent of their purchases from micro and small enterprises, starting from April 1, 2015.

In tune with the Modi Government's startup India, Make In India and Digital India, a number of initiatives have been launched to boost entrepreneurship in the country. However, it remains to be seen how many of these programmes can achieve success on the ground, where reaching out to entrepreneurs from across the country is a challenge.