Will the GeM-Udyam tie-up unlock the procurement portal’s underutilised potential for MSEs?

The procurement of goods and services from the Government e-Marketplace (GeM) crossed the Rs 2 lakh crore mark in the financial year 2022-2023. Micro Small Enterprises (MSEs) alone have got business worth Rs 1.87 lakh crore through the platform since its inception in 2016.

To facilitate the entry of more such businesses into this ecosystem, GeM and Udyam—an online system for registering Micro, Small and Medium Enterprises (MSMEs)—have now joined forces.

As a part of this move, the Ministry of MSME will now share data of businesses registered on Udyam with GeM, Narayan Rane, the Union Minister of MSME, tweeted on July 12.

The tweet says that as a part of this partnership, GeM will help small businesses that are Udyam-registered by organising workshops and training sessions to teach them about the public procurement portal. GeM will also facilitate online market linkages for last-mile MSEs in public procurement. For this, MSEs need to register as sellers on the GeM portal.

Whether or not this partnership will help more MSEs join GeM remains anyone’s guess. However, stakeholders are optimistic about GeM's potential to support the growth of small businesses in India. 

The exchange of data between the two platforms will provide the Ministry of MSME with real-time information about orders, improving order tracking and transparency. MSEs will receive enhanced support, as the ministry staff will facilitate queries and issues, acting as intermediaries with GeM. For new registrants with Udyam certification, the process of signing up on GeM will be easy as the ministry will populate the data.

GeM and Udyam are already integrated, allowing MSEs to register on both platforms simultaneously. However, the exact number of active MSE sellers on GeM is not known. 

Active sellers in ecommerce are those who either make at least one sale per month or have at least one product listed for sale.

Through the new data-sharing agreement, the ministry seeks to streamline the process for MSE registration on GeM and ensure that the number of active sellers increases on the platform.

Vinod Kumar, President of India SME Forum, highlights that the GeM-Udyam partnership will enable the ministry to improve monitoring of the number of orders placed with MSE sellers, women-owned, and SC/ST-owned enterprises. 

“This is particularly significant as there is a reservation percentage for these three categories in public procurement through GeM,” he says.

India SME Forum, a non-profit organisation and a GeM partner, has onboarded 11,000 small businesses on GeM.

According to Kumar, with the integration of data sharing, the ministry will also have enhanced visibility of the orders coming in. “There are around eight lakh MSEs on the platform but less than two lakh are actually transacting,” he says.

Participating in public procurement

The GeM portal currently has a total of 65.42 lakh registered sellers, with 8.32 lakh being micro and small sellers. Udyam has 2.06 crore registered MSMEs, with over 1.99 crore classified as micro-enterprises, 6 lakh as small enterprises, and about 52,688 as medium enterprises.

According to Kalavathy Sridharan, Managing Director of Shree Apparels, getting an order via GeM depends on one’s skills. “It is neither tough nor easy. To compete with the low prices of large enterprises, one needs to strategise on how they can increase profitability at a lower cost,” she says.  

Chennai-based Shree Apparels joined GeM in September 2022 and has so far received around six orders, amounting to Rs 15 lakh to Rs 20 lakh in total. 

“With GeM, we can find all the opportunities and orders from different government departments in one place. It is convenient,” she says.

Krushnkant Masal, who handles the government business for the Pune-based Vintech Electronics, also believes that GeM has made it easier to quote for different departments on one platform. 

“Earlier we had to individually register on many portals like E-procure, myTenders, etc. Now that burden is not there,” he says. 

In FY23 Vintech Electronics received approximately 100 orders from GeM, generating a business of around Rs 7 crore.

Talking about the inclusivity of the portal, Anjenay Agarwal, Founder of Royal Bee Natural Products, says that small producers can get good orders from government departments via GeM. Earlier, these orders were limited to registered old suppliers of the government. 

Royal Bee sells its range of honey and sanitizers on the platform.

However, not everyone is optimistic. 

An MSE seller from Bihar, who wishes to remain anonymous, says that things haven’t changed for him despite using the platform.

According to him, securing orders solely through online channels is unlikely without offline connections or active marketing efforts. He also raised concerns about corruption that exists at the state level, with middlemen acting as intermediaries between government departments and sellers, taking money from sellers to facilitate orders.

His MSE has done transactions worth Rs 1 crore on the platform. "One good thing that has happened is that the payment is not delayed," he says.

Streamlining vendor assessment process

Vendors seeking GeM validation need to undergo vendor assessment. This checks the quality of a vendor and the products or services on offer. The government fee for this process is Rs 11,200 + GST, and its validity is three years.

The verification process, Agarwal says, is rigorous. “For our sanitizer, they spent almost four hours performing the online audit. They checked everything, including the license, our lab, and the manufacturing procedure,” he says.

According to Jaman Singh Negi, Manager - HORECA segment, Pansari Group, GeM has made the process of public procurement inclusive and can be a game changer in the long run. 

However, he believes that the vendor assessment process is complicated and there is a lack of customer support. The staffs for audit from the Quality Council of India (QCI) lack technical expertise, he says.

According to Kumar of India SME Forum, the recent move will also hugely impact the vendor assessment process for MSEs. He says that if an MSE has already been assessed by the Ministry and holds certifications from the Ministry of MSME or its affiliated organisations, it will be exempted from undergoing any further assessment process.

GeM's objective is to make public procurement inclusive and promote ease of doing business for MSEs. Ensuring regular orders for small businesses is crucial, and the impact of the recent move in achieving this goal will become apparent in due time.

(The copy has been updated to correct a spelling mistake.)