MSMEs Gain Market Linkages through Vendor Development Initiatives

The detail of State wise beneficiaries (Total 9,474 MSMEs) through the Vendor Development Programme (VDP) organized by the Development Institutions (DIs) during 2019-2023 is placed at Annexure-I.

Vendor Development Programme is organized to facilitate market linkages for effective implementation of Public Procurement Policy. It benefits MSMEs in their GeM registration and detailed understanding of Public Procurement with CPSEs. During 2019-23, 7509 Micro Units, 1807 Small Units and 158 Medium Units participated in Vendor Development Programmes organized by MSME-Development and Facilitation Office’s (DFOs) in collaboration with CPSEs and other Government Departments.

Vendor Development Programmes through effective implementation of Public Procurement Policy has expanded the business of MSMEs. Ministry of MSME has notified the implementation of the Public Procurement Policy for Micro and Small Enterprises order, 2012 from 1st April, 2012 with the objective of promoting the growth and development of MSEs by improving their market access and linkages. This policy provides the following benefits to MSEs by the CPSUs:

(i)   Purchase Preference: Policy mandates 25% annual procurement from Micro and Small Enterprises (MSEs) by Central Ministries/ Departments/ Central Public Sector Undertakings (CPSUs), including 4% from MSEs owned by SC/ST and 3% from MSEs owned by Women entrepreneurs.

(ii) Price match-making facility: If the L1 price by a non-MSE is the lowest, participating MSEs quoting a price within a band of L1+15% will be allowed to bring down their price to match L1 price. Such MSEs are allowed to supply at least 25% of total tendered value. In case there is more than one such MSE, the supply will be shared proportionately (to tendered quantity). In case the tender item is non-splitable or non-divisible, an MSE quoting a price within the price band L1+15% may be awarded full or complete supply of total tendered value, if it matches the L1 price.

(iii)    Exemption from Earnest Money Deposit: MSEs are exempted from payment of earnest money deposit.

(iv)    Other Benefits: To reduce the transaction cost of doing business, MSEs are facilitated by providing them tender sets free of cost and adopting e-procurement to bring in transparency in tendering process.

The benefits listed at (i) to (iv) above are available only to Micro and Small Enterprises.

This information was given by Minister of State for Ministry of Micro, Small & Medium Enterprises, Sushri Shobha Karandlaje in a written reply in Rajya Sabha today.

State/UT wise details of MSMEs assisted under Vendor Development Programmes (VDPs)