{"id":19294,"date":"2020-11-10T16:01:46","date_gmt":"2020-11-10T10:31:46","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19294"},"modified":"2021-01-12T15:26:34","modified_gmt":"2021-01-12T09:56:34","slug":"public-procurement-policy-for-msme","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/","title":{"rendered":"Everything you need to know about Public Procurement Policy For MSME"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Public Procurement is a process by which the Government obtains goods and services from the private companies and pays them in monetary conditions for the goods as well as services provided by them. India\u2019s rigid and institutional frameworks look to make sure responsibility, answerability and effectiveness in the <strong><em>Public Procurement Policy<\/em><\/strong>.&nbsp; The fundamental principle is to acquire resources &amp; services of specific pre-eminence at the most competitive cost in an apparent and non-arbitrary method.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/#Public_Procurement_Policy_for_MSME\" >Public Procurement Policy for MSME<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/#How_does_the_Government_Carry_out_Public_Procurement\" >How does the Government Carry\nout Public Procurement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/#What_is_the_Legal_Framework_Adopted_in_India_for_Public_Procurement_Policy\" >What is the Legal Framework Adopted\nin India for Public Procurement Policy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/#What_are_the_Issues_in_the_Public_Procurement_System_in_India\" >What are the Issues in the\nPublic Procurement System in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/#Reason_for_Recent_Changes_in_Public_Procurement_Policy\" >Reason for Recent Changes in\nPublic Procurement Policy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/public-procurement-policy-for-msme\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Public_Procurement_Policy_for_MSME\"><\/span>Public Procurement Policy for MSME<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The objective of Public Procurement Policy is promotion as well as development of <a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSME<\/strong><\/a> Sector by supporting them in advertising the goods produced and services provided by them. Yet, the policy relies upon the core principle of competitiveness, remaining to sound procurement performance and implementation of supplies according to the system that is fair, reasonable, transparent, competitive as well as cost effective.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_the_Government_Carry_out_Public_Procurement\"><\/span>How does the Government Carry\nout Public Procurement?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The government conducts the Public Procurement Policy by the following-<\/strong><\/em><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/the-Government-Carry-out-Public-Procurement-e1605001913871.png\" alt=\"Government Carry out Public Procurement\" class=\"wp-image-19307\" width=\"489\" height=\"490\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/the-Government-Carry-out-Public-Procurement-e1605001913871.png 812w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/the-Government-Carry-out-Public-Procurement-e1605001913871-150x150.png 150w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/the-Government-Carry-out-Public-Procurement-e1605001913871-300x300.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/the-Government-Carry-out-Public-Procurement-e1605001913871-768x770.png 768w\" sizes=\"(max-width: 489px) 100vw, 489px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Advertised Tender Enquiry<\/h3>\n\n\n\n<p>Advertised Tender Enquiry is the&nbsp;default&nbsp;mode of procurement. The tender has to be advertised on <strong><em>Governmental Websites<\/em><\/strong>, <strong><em>National Newspapers<\/em><\/strong>, the <strong><em>Central Public Procurement Portal<\/em><\/strong>, <strong><em>Indian Trademark Journal<\/em><\/strong>, and <strong><em>Government E-Marketplace<\/em><\/strong>, and also circulated in <strong><em>Foreign Embassies<\/em><\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Limited Tender Enquiry<\/h3>\n\n\n\n<p>Procurement is acquired\nthrough selected suppliers only. The selected lists of vendors are prepared\nthrough a screening process and are directly approached for bidding.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Two-stage Bidding<\/h3>\n\n\n\n<p>Two bids that are\nTechnical and Financial are invited from the procurers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Nomination-based Tenders<\/h3>\n\n\n\n<p>Some tenders are\nnomination based, that are called up by the government.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Procurements without Calling\nTenders<\/h3>\n\n\n\n<p>This is classically\nassumed for small value purchases of standard qualifications.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Electronic Reverse Auction<\/h3>\n\n\n\n<p>Presentation by\nbidders of sequentially is more favorable bid during a scheduled stage of time\nand routine evaluations of bids are done.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Government to Government&nbsp;<\/h3>\n\n\n\n<p>Government to Government&nbsp;deals involve the transfer or sale of a country\u2019s defense equipment, services, training, etc. to other foreign governments.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Legal_Framework_Adopted_in_India_for_Public_Procurement_Policy\"><\/span>What is the Legal Framework Adopted\nin India for Public Procurement Policy?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Legal Framework adopted in India for Public Procurement Policy are as follows-<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Legal-Framework-adopted-in-India-for-Public-Procurement-Policy.png\" alt=\"Legal Framework adopted in India for Public Procurement Policy\" class=\"wp-image-19375\" width=\"473\" height=\"409\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Legal-Framework-adopted-in-India-for-Public-Procurement-Policy.png 953w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Legal-Framework-adopted-in-India-for-Public-Procurement-Policy-300x259.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Legal-Framework-adopted-in-India-for-Public-Procurement-Policy-768x664.png 768w\" sizes=\"(max-width: 473px) 100vw, 473px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Constitutional Provision<\/h3>\n\n\n\n<p>The Constitution\nof India authorizes the Central and the State Governments to deal for goods and\nservices in the name of the <strong><em>President of India<\/em><\/strong> or the Governor\nof the State respectively, and it directs self-sufficiency in public spending. Though,\nit does not stipulate any procurement policies or procedures.<\/p>\n\n\n\n<p><strong><em>Article\n282<\/em><\/strong> provides for financial autonomy in public spending, however there\nare no provisions to address any grievance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Legal Provisions<\/h3>\n\n\n\n<p>A&nbsp;<strong><em>Public\nProcurement Bill<\/em><\/strong>&nbsp;was proposed in <strong><em>Lok Sabha in 2012<\/em><\/strong>, which\ncould not be passed, where this bill was revamped in 2015 and introduced in\n2015<em>.<\/em> But it suffered the same fate\nas that of earlier bill. So, as of now, there is&nbsp;No Central Legislation&nbsp;in\nIndia that administers public procurement of goods and services. Only 5 states\nin India, i.e. Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh and Assam have\nstate public procurement legislation.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Competition Act, 2002<\/h4>\n\n\n\n<p>The <strong>Competition Act, 2002<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/The_Competition_Act,_2002\"><strong>[1]<\/strong><\/a><\/sup> penalizes anti-competitive activities such as bid rigging, collusive bidding, cartelization, and abuse of dominance.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Right to Information Act, 2005<\/h4>\n\n\n\n<p>It promotes transparency in government dealings by enabling Indian citizens to efficiently procure information from the government through \u201c<strong><em>Right to Information\u201d<\/em><\/strong> application.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Integrity pact under the General\nFinancial Rules (GFR) &amp; CVC guidelines<\/h4>\n\n\n\n<p>The pact addresses\nintegrity in procurement of activities including the appointment of any\nexternal monitor to alleviate corruption as well as ethical risks.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Prevention of Corruption Act,\n1988&nbsp;&amp;&nbsp;Prevention of Money Laundering Act, 2002<\/h4>\n\n\n\n<p>This Act penalize\nbribery and money-laundering and provide for confiscation of property derived\nfrom money-laundering and other illicit activities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Supreme Court Directions<\/h3>\n\n\n\n<p><em><strong>The directions by the Supreme Court are as follows-<\/strong><\/em><\/p>\n\n\n\n<ul><li>All contracts by the State should be granted by public\nauction or tenders to guarantee complete transparency and provide the eligible\npersons with the opportunity to participate in the auction;<\/li><li>All official acts should be set in motion by\npublic interest and should encourage public confidence;<\/li><li>The State should not grant contracts by any\nprivate negotiation subject to specific exceptions based on the nature of the\ntrade, and emergency circumstances;<\/li><li>Government actions should be fair and nothing\nshould be done which gives an impression of biasness, favoritism or nepotism. Emergence\nof public justice is as important as doing justice itself.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Issues_in_the_Public_Procurement_System_in_India\"><\/span>What are the Issues in the\nPublic Procurement System in India?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The issues in the Public Procurement Policy in India are as follows-<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The Absence of a Comprehensive\nProcurement Act<\/h3>\n\n\n\n<p>It has resulted\nin diverse procedures and multiplicity of rules across the procuring companies.&nbsp; Many times undertaking any comprehensive\nactions against the stakeholders involved in unfair practices become\nchallenging in the absence of a strong legislation<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Lack of standard bid documents<\/h3>\n\n\n\n<p>Instead of the\ninitiatives taken for regulation of the bid documents and code of contract\nfollowing the international organizations such as <strong><em>IMF<\/em><\/strong> or the <strong><em>World\nBank<\/em><\/strong>, there continues to be a diversity of bid documents across the\nbusinesses in terms of addition, rephrase or repetition of clauses and provisions.\nSuch uncertainty and disagreements in the bid documents stand against the\nphilosophy of standardization, transparency as well as accountability.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Delays in Activities in\nProcurement Series<\/h3>\n\n\n\n<p>The procurement\nprocess is more often delayed in the stage of assessment need, budget\npreparation as well as approval. Likewise, unavailability of adequate\nprocurement professionals and non-realization of the necessary information regularly\nappears to be responsible for the delay in preparing the technical qualifications.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Unfair Practices and Corruption<\/h3>\n\n\n\n<p>Despite the\nprocedural protection, corruption level in India is supposed to be high in\nrecent years that lead to low quality of public services which eventually\nhampers the development.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Presence of Anti-competitive Elements<\/h3>\n\n\n\n<p>The survival of\nanti-competitive practices by the bidders\u2019 community tends to obstruct the\nprocurement process by opposing the best value of money. Competition issues in\nIndia mostly concern with collusive bidding, bid rigging, cartelization and <strong><em>Abuse\nof Dominance<\/em><\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Low Participation of the Domestic\nMSMEs<\/h3>\n\n\n\n<p>Despite the MSMEs\nprovisions, the participation of domestic MSMEs in the public procurement policy\nremains low in India. Apart from the resource related entry barriers including\nanti-competitive fundamentals, many MSMEs do not take part in public\nprocurement due to an insight that government obtained companies often delay in\nreleasing the contract payment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Competency and Skill of the\nProcurement Officials<\/h3>\n\n\n\n<p>India doesn\u2019t\nhave an <strong><em>Independent Grievance Redressal Mechanism<\/em><\/strong> in the procurement\nPolicy. At the first level, an aggrieved bidder files for complaint on the\nmisdeed or irregularities of the concerned officials of the procuring company. The\njudgement lacks reliability as the authority is from the procuring company\nitself that is responsible for causing grievances.<\/p>\n\n\n\n<p>The Government of\nIndia&nbsp;imposed restrictions on Public Procurement Policy from bidders of the\ncountries that share a border with India,&nbsp;citing the grounds of defense as\nwell as national security. It was done by amending the&nbsp;<strong><em>General\nFinancial Rules 2017<\/em><\/strong>.<\/p>\n\n\n\n<p>Earlier the Central\ngovernment made mandatory for sellers on the&nbsp;<strong><em>Government E-Marketplace Portal<\/em><\/strong>\nto explain the country of goods when registering for new products.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FDI<\/h3>\n\n\n\n<p>The government amended&nbsp;<strong><em>Foreign Direct Investment Rules<\/em><\/strong> authorizing prior approval for investment by companies in countries that share land borders with India.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reason_for_Recent_Changes_in_Public_Procurement_Policy\"><\/span>Reason for Recent Changes in\nPublic Procurement Policy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to authority,\nthe decision for amending Public Procurement Policy was taken to&nbsp;prevent\nthe invasion of Chinese products and investments&nbsp;into India, to push India\ntowards <strong><em>Atmanirbhar Bharat<\/em><\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The present study\nreviews that the <strong><em>Public Procurement Policy<\/em><\/strong> and recent reform initiatives taken\nin India, outlines the requirement for changes in the institutional structure.\nThe current system appears to be complex due to heterogeneity in the\nrequirements in the federal structure of the government functioning and absence\nof a comprehensive procurement Act. <\/p>\n\n\n\n<p>The system suffers from some serious drawbacks such as fragmented procedures and rules, lack of standard bid documents, unavailability of sufficient procurement professionals, and lack of transparency, widespread corruption, and lack of independent grievance redressal mechanism. Therefore, these need to be backed up by legislative power and Draft Bill 2015 &amp; enacted with revisions in certain areas. Contact <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a> for more information related to MSME Registration. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/new-debt-facilities-for-distressed-msme\/\">\nAn Overview of New Debt Facilities for Distressed MSME\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Public Procurement is a process by which the Government obtains goods and services from the private companies and pays them in monetary conditions for the goods as well as services provided by them. India\u2019s rigid and institutional frameworks look to make sure responsibility, answerability and effectiveness in the Public Procurement Policy.&nbsp; The fundamental principle is [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":19347,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[1200],"acf":{"service_id":"71"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":6115,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19294"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19294"}],"version-history":[{"count":28,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19294\/revisions"}],"predecessor-version":[{"id":24038,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19294\/revisions\/24038"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19347"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}