The Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 requires central ministries, departments and CPSUs to buy a share of their needs from MSEs and gives MSEs specific benefits in tenders.
Procurement targets
- At least 25% of annual procurement from MSEs.
- Within that, 4% from MSEs owned by SC/ST entrepreneurs and 3% from women-owned MSEs.
- 358 items are reserved for exclusive purchase from MSEs.
Benefits in tenders
- Tender documents free of cost.
- Exemption from Earnest Money Deposit (EMD).
- Relaxation in prior turnover and prior experience criteria, as allowed in the tender.
- L1 + 15% price matching: when the lowest bidder is not an MSE, an MSE that quoted within 15% of L1 can match the L1 price and get at least 25% of the order value. If the item cannot be split, the MSE may get the full order.
Who is covered, and who is not
- Micro and small enterprises with valid Udyam Registration.
- Traders, distributors, sole agents and works contracts are excluded from the policy's benefits.
- Medium enterprises are not covered by these MSE benefits.
- The policy does not exempt MSEs from security deposit or performance bank guarantee.
Many tenders still ask for NSIC registration or specific certificates for these benefits. Always follow the exact wording of the tender.
Sources
- Public Procurement Policy for MSEs – FAQs, O/o DC (MSME) ↗
- General Financial Rules 2017 (as amended), Ministry of Finance ↗
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