Public Procurement Policy

Ministry of Micro, Small and Medium Enterprises Office of Development Commissioner (MSME)

New Delhi,

The 23rd March, 2012

ORDER

Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012

Whereas, the Central Government Ministries, Departments and Public Sector Undertakings shall procure minimum of 20 per cent of their annual value of goods or services from Micro and Small Enterprises;

And whereas, the Public Procurement Policy shall apply to Micro and Small Enterprises registered with District Industries Centers or Khadi and Village Industries Commission or Khadi and Village Industries Board or Coir Board or National Small Industries Corporation or Directorate of Handicrafts and Handloom or any other body specified by Ministry of Micro, Small and Medium Enterprises;

And whereas, the Public Procurement Policy rests upon core principles of competitiveness, adhering to sound procurement practices and execution of orders for supply of goods or services in accordance with a system which is fair, equitable, transparent, competitive and cost effective; and

And whereas, for facilitating promotion and development of micro and small enterprises, the Central Government or the State Government, as the case may be, by Order notify from time to time, preference policies in respect of procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries or Departments, as the case may be, or its aided institutions and public sector enterprises.

Now, therefore, in exercise of the powers conferred in section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006, the Central Government, by Order, notifies the Public Procurement Policy (hereinafter referred to as the Policy) in respect of procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries, Departments and Public Sector Undertakings.

2.Short title and commencement. -

  1. This Order is titled as ‘Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012’.
  2. It shall come into force with effect from 1st April 2012.

3.Mandatory procurement from Micro Small and Enterprises. –

  1. Every Central Ministry or Department or Public Sector Undertaking shall set an annual goal of procurement from Micro and Small Enterprises from the financial year 2012-13 and onwards, with the objective of achieving an overall procurement of minimum of 20 per cent, of total annual purchases of products produced and services rendered by Micro and Small Enterprises in a period of three years.
  2. Annual goal of procurement also include sub-contracts to Micro and Small Enterprises by large enterprises and consortia of Micro and Small Enterprises formed by National Small Industries Corporation.
  3. After a period of three years i.e. from 1st April 2015, overall procurement goal of minimum of 20 per cent shall be made mandatory.
  4. The Central Ministries, Departments and Public Sector Undertakings which fail to meet the annual goal shall substantiate with reasons to the Review Committee headed by Secretary (Micro, Small and Medium Enterprises), constituted in Ministry of Micro, Small and Medium Enterprises, under this Policy.

4.Special provisions for Micro and Small Enterprises owned by Scheduled Castes or Scheduled Tribes ─ Out of 20 per cent target of annual procurement from Micro and Small Enterprises, a sub-target of 20 per cent (i.e., 4 per cent out of 20 per cent) shall be earmarked for procurement from Micro and Small Enterprises owned by the Scheduled Caste or the Scheduled Tribe entrepreneurs. Provided that, in event of failure of such Micro and Small Enterprises to participate in tender process or meet tender requirements and L1 price, 4 per cent sub-target for procurement earmarked for Micro and Small Enterprises owned by Scheduled Caste or Scheduled Tribe entrepreneurs shall be met from other Micro and Small Enterprises.

5. Reporting of targets in Annual Report ─

  1. The data on Government procurements from Micro and Small Enterprises is vital for strengthening the Policy and for this purpose, every Central Ministry or Department or Public Sector Undertaking shall report goals set with respect to procurement to be met from Micro and Small Enterprises and achievement made thereto in their respective Annual Reports.
  2. The annual reporting shall facilitate in better understanding of support being provided by different Ministries or Departments or Public Sector Undertakings to Micro and Small Enterprises.

6. Price quotation in tenders ─

  1. In tender, participating Micro and Small Enterprises quoting price within price band of L1+15 per cent shall also be allowed to supply a portion of requirement by bringing down their price to L1 price in a situation where L1 price is from someone other than a Micro and Small Enterprise and such Micro and Small Enterprise shall be allowed to supply up to 20 per cent of total tendered value.
  2. In case of more than one such Micro and Small Enterprise, the supply shall be shared proportionately (to tendered quantity).

7. Developing Micro and Small Enterprise vendors – The Central Ministries or Departments or Public Sector Undertakings shall take necessary steps to develop appropriate vendors by organizing Vendor Development Programmes or Buyer-Seller Meets and entering into Rate Contract with Micro and Small Enterprises for a specified period in respect of periodic requirements.

8. Annual Plan for Procurement from Micro and Small Enterprises on websites The Ministries or Departments or Public Sector Undertakings shall also prepare Annual Procurement Plan for purchases and upload the same on their official website so that Micro and Small Enterprises may get advance information about requirement of procurement agencies.

9. Enhancing participations of Micro and Small Enterprises including those owned by Scheduled Castes or Scheduled Tribes in Government procurements─ For enhancing participation of Scheduled Castes or Scheduled Tribes in Government procurement, the Central Government Ministries, Departments and Public Sector Undertakings shall take following steps, namely:-

  1. Special Vendor Development Programmes or Buyer-Seller Meets shall be conducted by Departments/Public Sector Undertakings for Scheduled Castes or Scheduled Tribes;
  2. Outreach programmes shall be conducted by National Small Industries Corporation to cover more and more Micro and Small Enterprises from Scheduled Castes or Scheduled Tribes under its schemes of consortia formation; and
  3. National Small Industries Corporation shall open a special window for Scheduled Castes or Scheduled Tribes under its Single Point Registration Scheme (SPRS).

10. Reduction in transaction cost ─ To reduce transaction cost of doing business, Micro and Small Enterprises shall be facilitated by providing them tender sets free of cost, exempting Micro and Small Enterprises from payment of earnest money, adopting e-procurement to bring in transparency in tendering process and setting up a Grievance Cell in the Ministry of Micro, Small and Medium Enterprises.

11. Reservation of specific items for procurement─ To enable wider dispersal of enterprises in the country, particularly in rural areas, the Central Government Ministries or Departments or Public Sector Undertakings shall continue to procure 358 items (Appendix) from Micro and Small Enterprises, which have been reserved for exclusive purchase from them. This will help in promotion and growth of Micro and Small Enterprises, including Khadi and village industries, which play a critical role in fostering inclusive growth in the country.

12.Review Committee–

  1. A Review Committee has been constituted under the Chairmanship of Secretary, Ministry of Micro, Small and Medium Enterprises, for monitoring and review of Public Procurement Policy for Micro and Small Enterprises vide Order No. 21(1)/2007-MA dated the 21st June 2010 (Annexure).
  2. This Committee shall, inter alia, review list of 358 items reserved for exclusive purchase from Micro and Small Enterprises on a continuous basis, consider requests of the Central Ministries or Departments or Public Sector Undertakings for exemption from 20 per cent target on a case to case basis and monitor achievements under the Policy.

13. Setting up of Grievance Cell ─ In addition, a ‘Grievance Cell’ will be set up in Ministry of Micro, Small and Medium Enterprises for redressing grievances of Micro and Small Enterprises in Government procurement. This cell shall take up issues related to Government procurement raised by Micro and Small Enterprises with Departments or agencies concerned, including imposition of unreasonable conditions in tenders floated by Government Departments or agencies that put Micro and Small Enterprises at a disadvantage.

14. Special Provisions for Defense Procurements─ Given their unique nature, defense armament imports shall not be included in computing 20 per cent goal for Ministry of Defence. In addition, defence equipments like weapon systems, missiles, etc. shall remain out of purview of such Policy of reservation.

15. Monitoring of Goals ─ The monitoring of goals set under the Policy shall be done, in so far as they relate to the Defence sector, by Ministry of Defence itself in accordance with suitable procedures to be established by them.

16. Removal of difficulty. ─ Any difficulties experienced during the course of implementation of the above Policy shall be clarified by Ministry of Micro, Small and Medium Enterprises through suitable Press releases which would be kept on the public domain.

(AMARENDRA SINHA)

Additional Secretary and Development Commissioner (MSME)

 

 

No. 21(1)/2007-MA

Government of India

Ministry of Micro, Small and Medium Enterprises Office of the Development Commissioner (MSME)

‘A’ Wing, 7th Floor, Nirman Bhavan,
New Delhi-110108
Dated: 21st June, 2010

ORDER

Subject: Constitution of a Committee for monitoring and review of the

Public Procurement Policy for Micro and Small Enterprises

Pending approval of the new Public Procurement Policy for Micro and Small Enterprises (MSEs), a Committee is hereby constituted for looking into the applicability of some of the provisions of the proposed Policy in respect of select Central Ministries/Departments.. The Committee will be chaired by the Secretary, Ministry of Micro, Small and Medium Enterprises.

2. The composition of the Committee will be as follows:

  1. Secretary, : Chairman Ministry of MSME
  2. Secretary, : Member Planning Commission
  3. Secretary, : Member Department of Public Enterprises
  4. Director General (Supplies and Disposals), : Member Department of Commerce,
  5. Ministry of Commerce and Industry
  6. Additional Secretary and : Member Secretary Development Commissioner (MSME)

3. The Committee will undertake the following functions:

  1. Consider the requests of the Central Ministries/Departments/PSUs for exemption, on a case to case basis, from the 20% target;
  2. Review the list of 358 items (as per Appendix) reserved for exclusive purchase from the MSEs based on the feedback received from the Central Ministries/Departments/PSUs ;
  3. Review the grievances received from MSEs regarding Government procurement, including imposition of unreasonable conditions in the tenders floated by the Government Departments/PSUs; and
  4. Suggest special measures to be taken by the Central Ministries/Departments for enhancing their procurements from MSEs.

4. The Committee may co-opt any other Ministries/Departments of the Central Government as well as State Governments or invite any other expert/person associated/concerned with the MSMEs in its meetings, as and when required.

5. The Office of the Development Commissioner (MSME) will provide secretariat support to this Committee.

6. This issues with the approval of the Competent Authority.

Sd/-
(Praveen Mahto)
Additional Economic Adviser
Ph: 23062230, Fax: 23061611

To,

All Members of the Committee

Copy to:

  1. Cabinet Secretariat (Shri V.P.Arora, Under Secretary), w.r.t. their O.M.No. 601/2/1/2009-Cab.III dated 24.02.2010
  2. PS to Minister (MSME)
  3. Sr. PPS to Secretary (MSME)

LIST OF ITEMS RESERVED FOR PURCHASE FROM SMALL SCALE INDUSTRIAL UNITS INCLUDING HANDICRAFT SECTOR

Sl. No. Item Description

  1. AAC/and ACSR Conductor upto 19 strands
  2. Agricultural Implements
    (a) Hand Operated tools and implements
    (b) Animal driven implements
  3. 3. Air/Room Coolers
  4. Aluminum builder's hardware
  5. Ambulance stretcher
  6. Ammeters/ohm meter/Volt meter (Electro magnetic upto Class I accuracy)
  7. Anklets Web Khaki
  8. Augur (Carpenters)
  9. Automobile Head lights Assembly
  10. Badges cloth embroidered and metals
  11. Bags of all types i.e. made of leather, cotton, canvas and jute etc. including kit bags, mail bags, sleeping bags and water-proof bag.
  12. Bandage cloth
  13. Barbed Wire
  14. Basket cane (Procurement can also be made from State Forest Corpn. and State Handicrafts Corporation)
  15. Bath tubs
  16. Battery Charger
  17. Battery Eliminator
  18. Beam Scales (upto 1.5 tons)
  19. Belt leather and straps
  20. Bench Vices
  21. Bituminous Paints
  22. Blotting Paper
  23. Bolts and Nuts
  24. Bolts Sliding
  25. Bone Meal
  26. Boot Polish
  27. Boots and Shoes of all types including canvas shoes
  28. Bowls
  29. Boxes Leather
  30. Boxes made of metal
  31. Braces
  32. Brackets other than those used in Railways
  33. Brass Wire
  34. Brief Cases (other than moulded luggage)
  35. Brooms
  36. Brushes of all types
  37. Buckets of all types
  38. Button of all types
  39. . Candle Wax Carriage
  40. Cane Valves/stock valves (for water fittings only)
  41. Cans metallic (for milk and measuring)
  42. Canvas Products :
    (a) Water Proof Deliver, Bags to spec. No. IS - 1422/70
    (b) Bonnet Covers and Radiators Muff. to spec. Drg. Lv 7/NSN/IA/130295
  43. Capes Cotton and Woollen
  44. Capes Waterproof
  45. Castor Oil
  46. Ceiling roses upto 15 amps
  47. Centrifugal steel plate blowers
  48. Centrifugal Pumps suction and delivery 150 mm. x 150 mm
  49. Chaff Cutter Blade
  50. Chains lashing
  51. Chappals and sandals
  52. Chamois Leather
  53. Chokes for light fitting
  54. Chrome Tanned leather (Semi-finished Buffalo and Cow)
  55. Circlips
  56. Claw Bars and Wires
  57. Cleaning Powder
  58. Clinical Thermometers
  59. Cloth Covers
  60. Cloth Jaconet
  61. Cloth Sponge
  62. Coir fibre and Coir yarn
  63. Coir mattress cushions and matting
  64. Coir Rope hawserlaid
  65. Community Radio Receivers
  66. Conduit pipes
  67. Copper nail
  68. Copper Napthenate
  69. Copper sulphate
  70. Cord Twine Maker
  71. Cordage Others
  72. Corrugated Paper Board and Boxes
  73. Cotton Absorbent
  74. Cotton Belts
  75. Cotton Carriers
  76. Cotton Cases
  77. Cotton Cord Twine
  78. Cotton Hosiery
  79. Cotton Packs
  80. Cotton Pouches
  81. Cotton Ropes
  82. Cotton Singlets
  83. Cotton Sling
  84. Cotton Straps
  85. Cotton tapes and laces
  86. Cotton Wool (Non absorbent)
  87. Crates Wooden and plastic
  88. (a) Crucibles upto No. 200 (b) Crucibles Graphite upto No. 500
    (c) Other Crucibles upto 30 kgs.
  89. Cumblies and blankets
  90. Curtains mosquito
  91. Cutters
  92. Dibutyl phthalate
  93. Diesel engines upto 15 H.P
  94. Dimethyl Phthalate
  95. Disinfectant Fluids
  96. Distribution Board upto 15 amps
  97. Domestic Electric appliances as per BIS Specifications:- - Toaster Electric, Elect. Iron, Hot Plates, Elect. Mixer, Grinders, Room heaters and convectors and ovens
  98. Domestic (House Wiring) P.V.C. Cables and Wires (Aluminum) Conforming to the prescribed BIS Specifications and upto 10.00 mm sq. nominal cross section
  99. Drawing and Mathematical Instruments
  100. Drums and Barrels
  101. Dust Bins
  102. Dust Shield leather
  103. Dusters Cotton all types except the items required in Khadi
  104. Dyes : (a) Azo Dyes (Direct and Acid)
    (b) Basic Dyes
  105. Electric Call bells/buzzers/door bells
  106. Electric Soldering Iron
  107. Electric Transmission Line Hardware items like steel cross bars, cross arms clamps arching horn, brackets, etc
  108. Electronic door bell
  109. Emergency Light (Rechargeable type)
  110. Enamel Wares and Enamel Utensils
  111. Equipment camouflage Bamboo support
  112. Exhaust Muffler
  113. Expanded Metal
  114. Eyelets
  115. Film Polythene - including wide width film
  116. Film spools and cans
  117. Fire Extinguishers (wall type)
  118. Foot Powder
  119. French polish
  120. Funnels
  121. Fuse Cut outs
  122. Fuse Unit
  123. Garments (excluding supply from Indian Ordnance Factories)
  124. Gas mantels
  125. Gauze cloth
  126. Gauze surgical all types
  127. Ghamellas (Tasllas)
  128. Glass Ampules
  129. Glass and Pressed Wares
  130. Glue
  131. Grease Nipples and Grease guns
  132. Gun cases
  133. Gun Metal Bushes
  134. Gumtape
  135. Hand drawn carts of all types
  136. Hand gloves of all types
  137. Hand Lamps Railways
  138. Hand numbering machine
  139. Hand pounded Rice (polished and unpolished)
  140. Hand presses
  141. Hand Pump
  142. Hand Tools of all types
  143. Handles wooden and bamboo (Procurement can also be made from State Forest Corpn. and State Handicrafts Corporation)
  144. Harness Leather
  145. Hasps and Staples
  146. Haver Sacks
  147. Helmet Non-Metallic
  148. Hide and country leather of all types
  149. Hinges
  150. Hob nails
  151. Holdall
  152. Honey
  153. Horse and Mule Shoes
  154. Hydraulic Jacks below 30 ton capacity
  155. Insecticides Dust and Sprayers (Manual only)
  156. Invalid wheeled chairs
  157. Invertor domestic type upto 5 KVA
  158. Iron (dhobi)
  159. Key board wooden
  160. Kit Boxes
  161. Kodali
  162. Lace leather
  163. Lamp holders
  164. Lamp signal
  165. Lanterns Posts and bodies
  166. Lanyard
  167. Latex foam sponge
  168. Lathies
  169. Letter Boxes
  170. Lighting Arresters - upto 22 kv
  171. Link Clip
  172. Linseed Oil
  173. Lint Plain
  174. Lockers
  175. Lubricators
  176. L.T. Porcelain KITKAT and Fuse Grips
  177. Machine Screws
  178. Magnesium Sulphate
  179. Mallet Wooden
  180. Manhole covers
  181. Measuring Tapes and Sticks
  182. Metal clad switches (upto 30 Amps)
  183. Metal Polish
  184. Metallic containers and drums other than N.E.C. (Not elsewhere classified)
  185. Metric weights
  186. Microscope for normal medical use
  187. Miniature bulbs (for torches only)
  188. M.S. Tie Bars
  189. Nail Cutters
  190. Naphthalene Balls
  191. Newar
  192. Nickel Sulphate
  193. Nylon Stocking
  194. Nylon Tapes and Laces
  195. Oil Bound Distemper
  196. Oil Stoves (Wick stoves only)
  197. Pad locks of all types
  198. Paint remover
  199. Palma Rosa Oil
  200. Palmgur
  201. Pans Lavatory Flush
  202. Paper conversion products- paper bags, envelops, Ice-cream cup, paper cup and saucers and paper Plates
  203. Paper Tapes (Gummed)
  204. Pappads
  205. Pickles and Chutney
  206. Piles fabric
  207. Pillows
  208. Plaster of Paris
  209. Plastic Blow Moulded Containers upto 20 litre excluding Poly Ethylene Terphthalate (PET) Containers
  210. Plastic cane
  211. Playing Cards
  212. Plugs and Sockets electric upto 15 Amp
  213. Polythene bags
  214. Polythene Pipes
  215. Post Picket (Wooden)
  216. Postal Lead seals
  217. Potassium Nitrate
  218. Pouches
  219. Pressure Die Casting upto 0.75 kg
  220. Privy Pans
  221. Pulley Wire
  222. PVC footwears
  223. PVC pipes upto 110 mm
  224. PVC Insulated Aluminium Cables (upto 120 sq. mm) (ISS:694)
  225. Quilts, Razais
  226. Rags
  227. Railway Carriage light fittings
  228. Rakes Ballast
  229. Razors
  230. RCC Pipes upto 1200 mm. dia
  231. RCC Poles Prestressed
  232. Rivets of all types
  233. Rolling Shutters
  234. Roof light Fittings
  235. Rubber Balloons
  236. Rubber Cord
  237. Rubber Hoses (Unbranded)
  238. Rubber Tubing (Excluding braided tubing)
  239. Rubberised Garments Cap and Caps etc
  240. Rust/Scale Removing composition
  241. Safe meat and milk
  242. Safety matches
  243. Safety Pins (and other similar products like paper pins, staples pins etc.)
  244. Sanitary Plumbing fittings
  245. Sanitary Towels
  246. Scientific Laboratory glass wares (Barring sophisticated items)
  247. Scissors cutting (ordinary)
  248. Screws of all types including High Tensile
  249. Sheep skin all types
  250. Shellac
  251. Shoe laces
  252. Shovels
  253. Sign Boards painted
  254. Silk ribbon
  255. Silk Webbing
  256. Skiboots and shoes
  257. Sluice Valves
  258. Snapfastner (Excluding 4 pcs. ones)
  259. Soap Carbolic
  260. Soap Curd
  261. Soap Liquid
  262. Soap Soft
  263. Soap washing or laundary soap
  264. Soap Yellow
  265. Socket/pipes
  266. Sodium Nitrate
  267. Sodium Silicate
  268. Sole leather
  269. Spectacle frames
  270. Spiked boot
  271. Sports shoes made out of leather (for all Sports games)
  272. Squirrel Cage Induction Motors upto and including 100 KW440 volts 3 phase
  273. Stapling machine
  274. Steel Almirah
  275. Steel beds stead
  276. Steel Chair
  277. Steel desks
  278. Steel racks/shelf
  279. Steel stools
  280. Steel trunks
  281. Steel wool
  282. Steel and aluminium windows and ventilators
  283. Stockinet
  284. Stone and stone quarry rollers
  285. Stoneware jars
  286. Stranded Wire
  287. Street light fittings
  288. Student Microscope
  289. Studs (excluding high tensile)
  290. Surgical Gloves (Except Plastic)
  291. Table knives (Excluding Cutlery)
  292. Tack Metallic
  293. Taps
  294. Tarpaulins
  295. Teak fabricated round blocks
  296. Tent Poles
  297. Tentage Civil/Military and Salitah Jute for Tentage
  298. Textiles manufactures other than N.E.C. (not elsewhere classified)
  299. Tiles
  300. Tin Boxes for postage stamp
  301. Tin can unprinted upto 4 gallons capacity (other than can O.T.S.)
  302. Tin Mess
  303. Tip Boots
  304. Toggle Switches
  305. Toilet Rolls
  306. Transformer type welding sets conforming to IS:1291/75 (upto 600 amps)
  307. Transistor Radio upto 3 band
  308. Transistorised Insulation - Testers
  309. Trays
  310. Trays for postal use
  311. Trolley
  312. Trollies - drinking water
  313. Tubular Poles
  314. Tyres and Tubes (Cycles)
  315. Umbrellas
  316. Utensils all types
  317. Valves Metallic
  318. Varnish Black Japan
  319. Voltage Stablisers including C.V.T's
  320. Washers all types
  321. Water Proof Covers
  322. Water Proof paper
  323. Water tanks upto 15,000 litres capacity
  324. Wax sealing
  325. Waxed paper
  326. Weighing Scale
  327. Welded Wire mash
  328. Wheel barrows
  329. Whistle
  330. Wicks cotton
  331. Wing Shield Wipers (Arms and Blades only)
  332. Wire brushes and Fibre Brushes
  333. Wire Fencing and Fittings
  334. Wire nails and Horse shoe nails
  335. Wire nettings of gauze thicker than 100 mesh size
  336. Wood Wool
  337. Wooden ammunition boxes
  338. Wooden Boards
  339. Wooden Box for Stamps
  340. Wooden Boxes and Cases N.E.C. (Not elsewhere classified)
  341. Wooden Chairs
  342. Wooden Flush Door Shutters
  343. Wooden packing cases all sizes
  344. Wooden pins
  345. Wooden plugs
  346. Wooden shelves
  347. Wooden veneers
  348. Woolen hosiery
  349. Zinc Sulphate
  350. Zip Fasteners

HANDICRAFT ITEMS

Sl.No. Item Description Source of Supply

  1. Cane furniture North Eastern Handicrafts and Handlooms
  2. Development Corporation Assam Govt. Marketing Corpn. Craft Society of Manipur Nagaland Handicrafts and Handlooms Development Corpn.
  3. Bamboo file tray, -do- Baskets, Pencil stand, side racks etc.
  4. Artistic Wooden Furniture Rajasthan Small Industries Corpn., U.P. Export Corporation.
  5. Wooden paper weight, racks etc. -do-
  6. Glass covers made of wood -do- and grass jute
  7. Jute furniture West Bengal Handicrafts Dev. Corpn. Jute Mfg. Development Corporation Orissa State Handicrafts Dev. Corpn.
  8. Jute bags, file cover -do-
  9. Woolen and silk carpets U.P. Export Corporation J and K Sale and Export Corporation