Govt agencies may not relax procurement norms for startups

On the basis of prior experience and turnover criteria with respect to goods that have implications on public safety and health, government agencies may not relax procurement norms for startups.

Earlier, the government had said that all central ministries and departments "may relax" condition of prior turnover and prior experience in public procurement to all startups if they meet quality and technical specifications. However, a doubt had arisen if it makes it optional for central ministries and departments to relax condition of prior experience and turnover in public procurement to startups, said a office memorandum of Expenditure Department.

It said that normally for all public procurement, government departments and ministries should ensure that experience and turnover criteria is relaxed.

However, there may be circumstances (like procurement of items related to public safety, health, critical security operations and equipment) where procuring entities may prefer the vendors to have prior experience rather than giving orders to new entities. For such procurements, wherever adequate justification exists, the procuring entities may not relax the criteria of prior experience/turnover for the startups," the communications said.

India has the third-largest number of startups globally. In January, Prime Minister Narendra Modi had unveiled a slew of incentives for them including tax holiday, inspector raj-free regime, capital gains tax exemption, Rs 10,000- crore corpus to provide funds, and relaxation in procurement norms. In its October monetary policy review, the Reserve Bank said startups can raise external commercial borrowings (ECBs) of up to $3 million in a financial year, with a view to boosting innovation and promoting job creation.

Also read : How new defence procurement norms are set to boost Startup India, Make in India

In March this year, Defence Minister Manohar Parrikar had unveiled the much-awaited Defence Procurement Procedure, saying it would ensure transparency and speed in the acquisition process and boost the Make in India initiative to reduce dependence on imports (rpt) imports.

The Defence Procurement Procedure (DPP) can push the agenda of Make in India and India’s target of achieving defence industry network. With the new DPP, it will be ensured that there is greater transparency and faster clearances