Govt procurement from MSEs cross Rs 12k crore mark; these ministries emerge biggest buyers

Credit and Finance for MSMEs: Central ministries and departments, which have been mandated by the government to procure a minimum 25 per cent of their annual procurement from micro and small enterprises (MSEs), have so far purchased goods worth Rs 12,291 crore from latter, according to the government data. The public procurement status for FY21 of 54 ministries available on the MSME Sambandh platform showed the Ministry of Petroleum and Natural Gas, Ministry of Power, Ministry of Heavy Industries and Public Enterprises, Ministry of Defence, and Ministry of Steel to be the biggest buyers from MSMEs so far.

Out of the 25 per cent procurement target of Rs 10,955 crore, the Petroleum ministry has made purchases worth Rs 5453.9 crore. Likewise, the Ministry of Power bought goods worth Rs 1735 crore from MSEs out of Rs 1,420 crore procurement target, and the Ministry of Heavy Industries acquired goods amounting to Rs 1,304 crore out of mandated Rs 3,228 crore. Goods bought by the Ministry of Defence and Ministry of Steel from MSEs were worth Rs 1,031 crore and Rs 672 crore out of the 25 per cent of minimum procurement worth Rs 2,000 crore and Rs 2,013 crore respectively. Importantly, these ministries were among the ones with the highest annual procurement target from all businesses including MSEs for FY21.

Meanwhile, overall procurement by 103 central public sector enterprises (CPSEs) as of date stood at Rs 37,947 crore while out of Rs 12,291 crore worth goods procured from MSEs benefitting 57,340 such units. Also, Rs 261 crore worth of goods were procured from 2,073 SC/ST owned MSMEs while procurement worth Rs 250 crore was made from 1,428 MSEs owned by women entrepreneurs.

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While procurement has been made from MSEs on a timely basis as per the requirement, lack of payments on time to small businesses has been among the critical bottlenecks for companies to manage their cash flow and plan growth apart from investing in new products. MSME Ministry had, in fact, recently reminded corporates particularly to pay MSMEs on time. The ministry had written to over 2,800 corporates, after 500 such businesses in September, to settle payments in October itself. According to the government data, more than Rs 13,400 crore in dues were cleared by CPSEs in the past five months. The amount of Rs 989.10 crore pending at September-end was also the highest among the five months.