General Financial Rules 2017 Amended To Ensure MSMEs' Participation in Govt. Tenders Less than 200 Cr Value

MSMEs have remained central essence Prime Minister Narendra Modi's mega announcement of Aatmanirbhar Bharat Abhiyan. One of the most important developments which remained not-much-hyped is about the commitment for MSMEs in all projects under Rs. 200 Crore tenders.

MSMEs which got great amount of consideration by Finance Minister Nirmala Sitharaman as part of the ‘Aatmanirbhar Bharat’ package for MSMEs barring global firms from par-taking in tenders below Rs. 200 crore, are in for a crude shock.

The MNCs in India are crowding out MSMEs from tenders which were supposed to be accessible to them.

After the announcement the office of Finance Minister had tweeted "Govt has notified the amendments to the General Financial Rules 2017 to ensure that henceforth global tenders will be disallowed in government procurement up to Rs 200 crore”.

On the contrary, the ground reality is a little bit different. MSMEs are often pointed out that the qualification criteria of tenders are gettingframed in a way that only MNCs in India qualify and exclude Indian MSMEs.

In an example, recent tender floated by Delhi Transco valuing 18 core suddenly raised the bar of past experience to exclude Indian MSME while only letting the MNCs to qualify.

The qualifying criteria for 220kV GIS (T19P090467 ) increased the past performance from 2 years experience of 2 bays in 1 substation to 2 years experience of 12 bays in 2 substations.

What is interesting is that these MNCs when they set up their Indian plants – qualifying requirement at the time generally asked for 2 bays in 1 substation experience for 2 yrs and collaborator’s experience was accepted and these MNCs qualified based on credentials of their parent company only.

In yet another tender floated by Rajasthan Rajya Vidyut Prasaran for 132kV GIS (RVPN/ EHV/ ASP/TN-54 ) valuing 31 crore asked for excessively high supply experience – 50 Nos./year in last 3 yrs out of which 30 Nos. supplied in India only.  Earlier Technical Collaborator’s experience was considered – now this clause deleted.

The Power Transmission Company of Uttrakhand followed the same steps for tenders of 132kV GIS and 220kV GIS valuing 35 and 42 Cr respectively. To exclude the only Indian MSME supplier other than MNCs,  a new clause was added asking for 20 numbers supply experience from Indian manufacturing facility only. As suspected,  the Technical Collaborator’s experience, considered earlier, was quietly buried.

Public Procurement constitutes a big promise for MSMEs as 25% of Central Government purchases are earmarked for MSEs.

To give additional access to MSMEs to government purchases, the Union government has recently announced as part of MSME package that it will not buy goods less than Rs 200 crore from foreign suppliers.