Governments, like private businesses, must purchase products and services to meet their operating needs. The process through which governments and state-owned firms acquire products and services from the private sector is known as public procurement. Because public procurement consumes a significant amount of taxpayer funds, governments are required to follow tight rules to guarantee that the process is fair, efficient, and transparent, and that public resources are not wasted.
Need for Start-ups to Participate in Public Procurement
The government is the country’s greatest buyer of all products and services. Around the world, public procurement accounts for a considerable portion of government spending. It accounts for 15% or more of the gross domestic product (GDP) in several nations throughout the world. In 2013, public procurement was expected to account for 29 percent of GDP in OECD nations, whereas it was predicted to account for roughly 25 percent of GDP in India.
As a result, the government provides the largest and greatest market for entrepreneurs to offer their goods and services. The government, as the world’s greatest buyer of products and services, may be a valuable customer. The government has taken several initiatives to increase procurement from small businesses.
Easing Public Procurement standards for start-ups
Public procurement standards have been eased to provide start-ups the opportunity to build up and compete with established entrepreneurs and firms in public procurement. In order to promote inclusiveness, all DPIIT recognized Start-ups have been provided functionality to list their products and services on Government e Marketplace (GeM portal). The portal provides exemption to Start-ups from criteria of ‘prior experience’, ‘turnover’ and ‘submission of EMD’ to provide equal opportunity to young entrepreneurs.
Further the DPIIT Recognized start-ups can register and sell their products directly to the Government Departments on the portal. DPIIT Recognized Start-ups can register on GeM using their DIPP Number, publish their products & services on the Government e-Marketplace and get the following benefits:
- Exemptions on Prior Experience, Prior Turnover, and Earnest Money Deposit requirements.
- An opportunity to work on a trial order with the Government. These trial orders give the buyer an option to test waters and be sure while procuring never-before-seen products.
- Get Feedback from the buyers to help the finetune their innovations. Such feedbacks, coming from various Government Departments, also provide validation to start-ups
- Removal of category issues on GeM for start-ups, enabling innovative products and services to be listed on the platform.
Till date, 2,545 start-ups have registered on GeM and availed the above benefits. These start-ups have supplied goods/services worth INR 407 Cr. to various departments.
Public procurement (government bids) in India can provide valuable pilot chances for businesses that have yet to acquire traction in the commercial sector. Opening government bids to start-ups, on the other hand, broadens the range of options accessible to government agencies, as start-ups are often more adaptable than corporate vendors and can offer less expensive, more innovative products and services.