Lok Sabha Question No. 42 (STARRED), answered on 2017-02-06
Subject: Public Procurement Policy
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: KONDA VISHWESHWAR REDDY

## GOVERNMENT OF INDIA

## MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA STARRED QUESTION No. *42 TO BE ANSWERED ON:  06.02.2017

## PUBLIC PROCUREMENT POLICY

## *42.  SHRI KONDA VISHWESHWAR REDDY:

Will  the  Minister  of  MICRO,  SMALL  AND  MEDIUM  ENTERPRISES  be pleased to state:

- (a) the  salient  features  of  the  Public  Procurement  Policy  for  the  Micro, Small and Medium Enterprises (MSMEs);
- (b) the major items procured by various PSUs from MSMEs under the said policy during the last three years;
- (c) whether the criteria of four  percent procurement  from MSMEs owned by    SC/ST  entrepreneurs  has  been  complied  with  by  PSUs  during  the  said period;
- (d) if so, the details thereof and if not, the reasons therefore; and
- (e) the  corrective  steps  taken/being  taken  by  the  Government  to    ensure effective compliance of the Public Procurement Policy by PSUs in the country?

## ANSWER

## MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI KALRAJ MISHRA)

(a)to(e): A statement is laid  on the Table of the House.

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  IN RESPECT  OF  LOK  SABHA  STARRED  QUESTION  NO.    *42  FOR ANSWER ON 6.2.2017.

(a): The Government has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012   under section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 which is applicable to Central Ministries /Departments /Public Sector Undertakings.  A minimum of 20% of the total annual procurement has been made mandatory from Micro and Small Enterprises by Central Ministries /Departments/Public Sector Undertakings with effect from 1st April 2015.  Out of this 20% target of annual procurement  from  Micro  and  Small  Enterprises,  a  sub-target  of  4%  has  been earmarked  for  procurement  from  Micro  and  Small  Enterprises  owned  by Scheduled Caste/ Scheduled Tribe entrepreneurs.  Under this Order, Micro and Small Enterprises get facility of tender set free of cost and exemption from the payment of Earnest Money. Micro and Small Enterprises quoting price within L1+15% are allowed to supply at least 20% by bringing down their price to L1 price. 358 items are reserved for exclusive procurement from Micro and Small Enterprises.

(b):     Item-wise procurement details are not maintained.  The order mandates overall percentage procurement as pointed above.

(c): In  most  of  the  cases,  the  target  of  procurement  from  Scheduled  Caste/ Scheduled  Tribe  entrepreneurs  has  not  been  met.  Only  nine  Central  Public Sector  Undertakings  (CPSUs)  have  reported  to  have  met  the  criteria  of  4% procurement from Scheduled Caste/ Scheduled Tribe entrepreneurs.

(d) :   Discussions with Departments/Central Public Sector Undertakings (CPSUs) have pointed out that one of the main reason is that there are not many Scheduled Caste/ Scheduled Tribe  entrepreneurs  who can  supply  the  articles required by the Departments/Central Public Sector Undertakings (CPSUs).

(e): A few corrective steps which have been taken by the Government are as follows:-

(i). The Government has launched National Scheduled Caste/ Scheduled Tribe Hub  in order to encourage Scheduled Caste/ Scheduled Tribe entrepreneurship so that the problem of supply is addressed.

(ii) Continuous  meetings  are  held  to  sort  out  the  issues  regarding procurement from Micro and Small Enterprises. Even meetings have been held  at  the  level  of  Union  Minister  for  Micro,  Small  and  Medium Enterprises.

(iii) Review Committee is meeting frequently under the Chairmanship of Secretary, Ministry of Micro, Small and Medium Enterprises.

(iv) An  on-line  Portal  www.msmedatabank.in  has  been  launched  for developing a comprehensive data of Micro and Small Enterprises across the country. (v) Various  State level  and  National  level  Vendor  Development Programmes  are  being  organized  in  association  with  Central  Public Sector  Undertakings  to  develop  the  vendors  for  supply  of  goods  and services amongst the Micro and Small Enterprises. (vi) National Small Industries Corporation Limited (NSIC) has organized  Vendor  Development  Programmes  especially  for  Scheduled Caste/ Scheduled Tribe entrepreneurs   in different parts of the country. (vii).  Department  of  Public  Enterprises  has  also  taken  initiative  for effective implementation of the Policy and introduced a penalty clause of deducting one mark for non-compliance of Policy at the time of annual Memorandum of Understanding (MoU)  evaluation  for the year 2015-16 from the  Central Public Sector Undertakings (CPSUs). (viii)    Department  of  Public  Enterprises    has  added  more  stringent provision by downgrading the status of Central Public Sector Undertakings (CPSUs) from  'Excellent'  to 'Very Good'  and  for other than excellent Central Public Sector Undertakings (CPSUs), the penalty clause has been increased  from one mark to  five mark during the year 2016-17 for non-compliance of the provisions of the Policy.

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