THE government is planning a new purchase preference policy for micro and small enterprises (MSEs) which would make it binding for all central government ministries, departments and central public sector enterprises (CPSEs) to source at least 20% of their annual purchases from MSEs. It would also mandate that 25% and 10%, respectively, of the reserved procurement should be from MSEs owned and operated by the SC/ST and women entrepreneurs. A Cabinet note in this regard is under circulation, and is waiting for legal clearances.
“The new policy is aimed at giving support to the sector at a time when the process of dereservation is going on,” an official in the MSME ministry said. At present, only 34 products are reserved for exclusive manufacturing of the MSME sector and the list is likely to be pruned further during the current financial year, he added.
Under the proposed policy, no central government department, ministries, CPSEs or aided institutions can impose any special criteria like minimum turnover while implementing the new provisions.
In special cases, however, ministries or other departments may fix a minimum turnover, but they have to provide reasons in writing. At present, the government gives indirect support to MSEs through initiatives such as a non-statutory purchase and price preference policy and financial assistance for participation in international fairs and exhibitions.
The present policy is not accruing the desired results as it is not binding on any department or company. Most of the ministries and CPSEs do not even report the data relating to their purchase from MSEs, the official said.