[Good Governance] Government e-Marketplace brings cheer for MSMEs amid COVID-19 gloom

Efficient public procurement is an important element of good governance, accelerated growth, and development of the country. This accounts for approximately 20-22 percent of the Gross Domestic Product (GDP). A contactless, cashless, and paperless online marketplace, Government e-Marketplace (GeM) was created in a record five months and introduced in 2016 to replace Directorate General of Supplies and Disposals (DGS&D)'s rate contracts, which were in rigid and had fixed-term contracts. GeM brings transparency, usability, inclusiveness, visibility, and speed of transactions in public procurement. For buyers, there is an average savings of around 10 percent on the median price on this e-Marketplace.

Building a framework

The GeM framework enables governments to get the best bang for the buck for the taxpayer’s money through features and tools such as e-bidding, reverse e-auction, and demand aggregation. Government procurement agencies can now follow global practices in the selection of vendors, quality products, and services through the GeM Platform. Most MSME vendors who are registered are satisfied with these transparent procurement practices that are increasing sales for them. With the government introducing more features to simplify and improve the turnaround time for decision making, more transactions are being logged, which indicates the resultant increased demand. 

In the fight against the COVID-19 pandemic, the Government has relaxed and made procurement easier for medical and protective equipment like thermal scanners, biohazard bags and disinfectants, and the onboarding of oxygen cylinder suppliers. With 186 service categories and 16,301 product categories, GeM, now has over 1.79 million total registered users, over 6.6 million transactions with a value of more than INR 1.15 trillion. To date, 0.69 million registered MSMEs are doing business with 52,042 buyer organisations who are giving them 56 percent of their orders. There was a significant rise in the number of registrations and transactions during April and May 2021.

Registrations of sellers, organization, orders, and their values under GeM as of 31 March 2021:

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GeM can cater to a large volume of transactions and has proved to be a reliable and stable platform. Any order up to Rs 25,000 can be directly placed on available vendors on  GeM if it meets the required quality, specifications, and delivery period. For procurement above Rs 25,000, purchases must be made through structured procedures such as price comparison, bidding, or reverse auction, where the criteria of the lowest price among available suppliers on the GeM must be followed to ensure price efficiency.

To ensure ample publicity of items and vendors available on GeM, special purpose vehicles (SPV) are appointed to manage the portal. The Government of India has made it mandatory for sellers to display the 'country of origin' on products to be sold on the GeM portal.

FY19-20 witnessed the highest number of orders placed on GeM. Since the onset of COVID-19 in March 2020, there was a decline in the orders and value on the portal due to sudden lockdowns and restrictions, which had an especially severe impact on MSMEs, SMEs, and startups.

However, soon after, July to September 2020 during unlock 1.0, 2.0 activity for MSMEs and SMEs started improving with a sudden rise in demand on medical and health-related products and services. 

Impact of the pandemic

Due to the pandemic, organisations and vendors and sellers were affected due to the loss of business activities across products and services which were non-essential. However, affected organisations, local vendors and sellers took this opportunity and registered themselves under the GeM portal to recover their business loss during the re-opening of the economic activities from July 2020 to February 2021.

The GeM platform helps create a powerful impact on several constituents of society in multiple ways, for instance:

• Creating opportunities for SMEs, woman self-help groups (SHG)
• Boosting Indian startups and innovation 
• Driving implementation of ‘Aatmanirbhar Bharat’
• Increased public savings up to 56 percent
• Rating of sellers, to arrest any deficiencies in quality products and services delivered 

GeM also introduced exclusive features, some of them are described below:

Startup Runway 2.0: An opportunity for startups to highlight their innovative products and services to Government buyers and engage in public procurement. GeM has created a dedicated marketplace category for all startups to list their products and services, irrespective of their DPIIT-certification.

Startups can list multiple products and services with minimal technical specifications and sell their products to Government buyers under 13 globally recognised startup sub-sectors, such as; Advanced Manufacturing and Robotics, Advertising (AdTech), Agriculture (AgriTech and new foods], Artificial Intelligence (AI), Big Data, and Analytics, Augmented/Virtual Reality (AR/VR), Blockchain, Clean Tech/Renewables, Consumer home electronics (+wearables, smart devices], Cybersecurity, education tech [EdTech], FinTech, Health & Life Sciences, and WaterTech.

The platform offers startups all the marketplace functionalities that are available to regular sellers and the objective is to spur "Make in India" procurement from Indian startups. To date, 3,981 startups have registered on GeM and have processed orders worth Rs 689 crore in gross merchandise value (GMV).

MSME, SC/ST entrepreneurs on GeM: GeM is collaborating with various stakeholders from the Micro, Small, and Medium Enterprises (MSME) ecosystem with a special focus on entrepreneurs from the scheduled castes/scheduled tribes (SC/ST). The partnership is based on the objective of achieving the mandatory procurement goal of 25 percent from MSMEs and a sub-target procurement of 4 percent goods and services from MSME entrepreneurs within SC/ST communities, by all government departments and the Public Sector Enterprises (PSE). This initiative encourages active participation of the MSE sector in public procurement. To date, nearly 3.19 lakh sellers have registered on GeM and have processed orders worth Rs 38,905 crore in GMV, of which approximately 68,286 are MSME sellers who have bagged orders worth Rs 20,263 crore in GMV.

Womaniya: ‘Womaniya’ initiative to promote products made by women entrepreneurs and women self-help groups [WSHGs], and spur women entrepreneurship by aligning them with opportunities to sell their products to various Government ministries, departments, and institutions. GeM has specially categorized products such as handicrafts and handloom, accessories, jute and coir products, bamboo products, organic foods, spices, home décor, and office furnishings for ease-in-procurement. Womaniya aligns with the Government’s initiative of reserving 3 percent in public procurement from women MSME entrepreneurs and this offers immense potential for procurement.

The Saras Collection: The Saras Collection is a pristine handcrafted collection of handicrafts, handloom textiles, office décor, furnishings, accessories, event souvenirs, and personal hygiene and care products from top-of-the-line SHGs in India. Social inclusion is one of the core values at GeM and we are focused on ensuring the participation of women entrepreneurs, self-help groups, artisans, weavers, and micro-entrepreneurs who face challenges in accessing government markets.

Future opportunities:

• Collaboration with portals of other Central Government departments, such as the defense procurement portal, and the Indian Railways eProcurement System (IREPS) as this may create a National Public Procurement Portal and reap benefits of scale and efficiency.
• Leveraging government delivery services for efficient, faster competitive delivery
• Educating the vendors and bidders to use the online portal, enhancing the user interface for buyers
• Collaborating with government-based NGOs for women to create employment opportunities and to promote and empower women entrepreneurs
• Efficient customer care, registration, training, and onboarding procedures to ensure a seamless experience for buyers and sellers while using the platform
• Market intelligence to ensure value for stakeholders i.e., right quality at the right price through extensive pricing benchmarks, insight, and knowledge

GeM has the potential to unleash the power of technology in supporting large value and volume of procurement in Railways, Defense, and CPSUs. GeM continues to assist government departments, ministries, public sector units, state governments, and Central Armed Police Forces (CAPF) to fight against the pandemic with essential supplies and services which are procured in record time. 

Notably, the MSME seller count jumped nearly 5x in 12 months amid COVID-19. GeM instills more stability in procurement processes, continues to refine products and services under Make in India initiatives, to make the procurement process transparent and much easier in the marketplaces. GeM will continue to pave the path of growth and drive MSME sustainability and foster innovation among startups to constantly play a differential role to ensure quality products and services at better price points.