Mandatory 20 per cent procurement by public enterprises from Micro, Small and Medium enterprises came into being on April one 2015 and but it seems to be not working as most of the PSUs have faltered in fulfilling this obligation. This has put several MSMEs in to difficulty. MSMEs account for nearly 40 per cent of manufacturing in the country.
Following the callous attitude of public enterprise, several MSME associations have complained to the government and as a result the MSME Minister Kalraj Mishra has issued a stern warning after ascertaining facts from public enterprises.
In the face of growing complaints from MSMEs, Prime Minister took a review meeting recently to deal with this problem, which was followed by a review meeting by MSME minister with his senior bureaucrats including the MSME Secretary K K Jalan, whose first task now appears to be to set right this problem.
A detailed analysis made by the MSME Ministry revealed that less than 100 of the 220 central public enterprises procured from MSMEs this financial year. Even these enterprises did not touch 10 per cent of their procurement from MSMEs, which put them in poor light, senior officials in the Ministry said.
Government notified public procurement policy for Micro & Small enterprises order in 2012 under The Micro, Small and Medium Enterprises Development Act of 2006. But the mandatory 20 per cent procurement from MSMEs came into being from April one 2015. There is a sub target of 4 per cent out of the 20 per cent earmarked for procurement from MSEs owned by Scheduled casts and Scheduled tribes.
The procurement policy of 2012 had provided 3 years time for achieving this 20 per cent and accordingly it was made mandatory from 2015. The order also stipulates that PSUs should give valid reasons if mandatory 20 per cent procurement is not achieved.
The order ensures that there is virtually no price preference to MSMEs so that PSUs are not put to any disadvantage by procuring from MSMEs.
Critical of non serious approach of public enterprises in implementing the order, MSME Minister will chair a meeting of first batch of 30-40 CMDs of Public Enterprises in mid-February. He proposed to meet all 220 PSU CMDs in batches in the next few weeks.
There are nearly five crore MSMEs in the country accounting for nearly 11 crore jobs in the country unlike large companies, which provide just 2 crore jobs.
Meanwhile, government has constituted a committee under MSME Secretary to review the list of 358 items reserved for exclusive purchase from Micro and Small enterprises. The committee will also monitor the implementation of public procurement policy.
This development augurs well for MSMEs as there is now someone to give them a patient hearing and take necessary steps to tackle their woes.
