Aiming to further broaden opportunities and support Prime Minister Narendra Modi’s Startup India initiative, the government would be making policy changes, which will now include bigger number startups under the ‘medium industry’ category making them eligible for public procurement incentive and preferential benefits.
As per the public procurement policy, the central government department and ministries and its central PSUs have to procure at least 20% of their purchases from micro and small enterprises beginning April 1, 2015.
“The governing policy in the matter includes only small and micro enterprises and does not mention medium industry. We are trying to figure ways to make it part of the policy without breaking the legal framework,” a senior government official said.
As per the Micro Small and Medium Enterprises (MSME) Act, a ‘medium enterprise’ should have an investment of not less than Rs 5 crore and not exceeding Rs 10 crore in equipment if it operates in manufacturing space.
As per the Micro Small and Medium Enterprises (MSME) Act, a ‘medium enterprise’ should have an investment of not less than Rs 5 crore and not exceeding Rs 10 crore in equipment if it operates in manufacturing space.
This limit ranges from Rs 2 crore to Rs 5 crore in the services sector.
This could mean that the slightly bigger startups might miss out on this benefit, which could be their initial survival.
The Department of Industrial Policy and Promotion are in talks with the department of expenditure and MSME ministry officials to find a way out so that the benefits announced in the Startup India action plan could be extended to such medium industry as well.
A startup, as defined under the action plan, is one having a turnover of more than Rs 25 crore and not be older than five years from incorporation date. After Modi launched the Startup India initiative in March this year, the MSME ministry has issued an order to all ministries and central public sector units to relax conditions related to prior experience and turnover for startups in all public procurements.
The order, however, only mentions the small and micro enterprises covered by the Public Procurement Policy for MSE order 2012.
It stated, “The startups are normally micro and small enterprises which may not have a track record. These will have the technical capability to deliver the goods and services as per prescribed technical and quality specifications and may not be able to meet the qualification criterion relating to prior experience-prior turnover.”
The objective was to provide an equal platform to startups in the manufacturing sector like the established companies and enable startups to participate in such tenders with relaxed eligibility conditions.
