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Modi's GeM 4.0 A New Way For MSMEs?

While talking about the numbers, PM Modi praised GeM for achieving annual procurement and said that the platform is MSMEs, with 57 per cent of order value coming from the MSME sector.

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The numbers of micro, small and medium enterprises (MSME) sellers on Prime Minister Modi's B2B e-commerce portal Government eMarketplace (GeM) have enabled the procurement of Rs 1 lakh crore within 2021-22 which is 160 per cent higher compared to last fiscal.

While talking about the numbers, PM Modi praised GeM for achieving annual procurement and said that the platform will enhance the growth of MSMEs, with 57 per cent of order value coming from the MSME sector.

PM took to Twitter and wrote that GeM India has achieved an order value of Rs 1 lakh crore in a single year. This is a significant increase from previous years. The GeM platform is especially empowering MSMEs, with 57 per cent of order value coming from the MSME sector.

"Over the last six years, the platform has grown and now features over 7,400 products across 150 categories. With 10 lakh sellers now showcased on the platform, it is clear that countless businesses that may not have been able to work with the government earlier can now do so courtesy of there being no entry barrier. So far, it certainly seems like GeM is serving the purpose it was created for," Amit Garg, Partner, Protium, a risk-focused lender that operates in the SME segment. 

Government e-Market or GeM is a marketplace where common user goods and services can be procured. According to the information available on india.gov.in (national portal of India), GeM is a self-sustaining and user-friendly portal for making procurement by government officers. It aims to transform the way in which procurement of goods and services is done by the government ministries and departments, public sector undertakings and others.

"The primary motive behind GeM was transparency, ease and efficiency in the procurement process of the government undertakings. This has not only resulted in a smooth and transparent procurement process but also has provided an online e-marketplace with a wide range of products from stationery to plant and machinery. This has enabled a wide range of sellers to actively participate in the ecosystem ranging from small businesses to large companies with a simple registration process," said Meghna Suryakumar, Founder and CEO, Crediwatch, a data-driven rating and information database platform.

GeM 4.0 To Pay The Way:

"To give equal opportunity to all the MSMEs, it is now mandatory for the entire government department to procure through the GeM portal only under rule 149 in the general financial rule 2017. Because of this, now the small scale industries are able to get government orders. Access to information has also become easier and conducting business smoothly with the government has enhanced significantly," Divij, Singhal, MD and CEO, ICCS, a provider of BPM and BPO services in India.

According to the experts, GeM is going to provide equal and balanced opportunities to all the MSMEs to place bids and generate orders. Apart from that, it will also create transparency in transactions. 

"The platform has been helpful in giving a competitive space to small players in a wide marketplace among large players. SMEs need a sustained cash flow to thrive in their business. By inclusion of government entities in their customer base, it fortifies their cash inflows as it ensures regular order book from the government given they have large requirements with nil probability of bad debts along with timely payments to MSME," said Suryakumar.

Garg added that the increase in sellers on the platform as well as the order value and split are encouraging numbers and we hope these will trend upwards in coming years. We aim to finance SMEs and MSMEs that collectively contribute up to 80 per cent of India’s gross domestic product (GDP); the more opportunities the sector has, the more we grow together.

Also, Suryakumar said that nearly half of India’s exports come from the MSME sector which the government intends to take to 60 per cent by FY25. So, the GeM will help in boosting up MSME indirect participation in the export market.

GeM 4.0 is different from earlier avatars:

The experts said that GeM is established to streamline the process of government procurement along with making it transparent and easier to access, especially for SMEs and MSMEs. Apart from that, technology has been leveraged to solve an age-old problem, according to the experts. 

"It has two major upgrades- one is that the buyers can collate multiple orders for the same product from different consignees across multiple organisations. Secondly,  bulk orders can be procured through government organisations with a delivery timespan of a year. Because of this, small businesses are also able to bid for large orders," said Singhal. 

Meanwhile, Suryakumar said that in the latest version of 4.0, the focus area is to attract large buyers like railways, defence, and central PSUs by improving pricing policy, user interface, and easier payment options. "Advanced analytics will be introduced with artificial intelligence (AI), machine learning, intensive training, and equipping the public sector with cutting-edge technology. This will increase the competitiveness of sellers," said Suryakumar. 

The latest updates came with fresh features to avoid several issues that were there over the last few years since its inception. Presently, the registration process is easy, while the UX, CRM, and customer support systems have been revamped significantly. 

"Bulk procurement and delivery flexibility have been increased for buyers while sellers can benefit from upgraded bidding processes, part of which entails a one-time deposit of caution money when bidding for L1 up to Rs 5 lakh for the sake of compliance. You can also filter sellers based on their service ratings on the platform which ensures that sellers have no choice but to offer great service in order to keep up with their competitors," said Garg.

The benefits: 

Talking about the benefits of GeM 4.0, Suryakumar said, "In the post-Covid-19 phase, there is to be a sharp uptick in demand due to pent up demand. Also, government PSU spending on infrastructure has been highlighted in the budget. The major buyers (ONGC, BHEL, Nalco etc. ) on the portal lead the major government spending. Hence, GeM as a portal will allow SMEs to actively participate in government immediate spending related growth prospects."

Suryakumar said that growth in credit in the MSME sector in the last 10 months has not shown much improvement due to Covid-19 hits. The vision of the CEO of GeM to assist in easier sanctioning of working capital loans to the small business sellers by integrating seller's transactions data with the banks can help in bridging the credit gap also.

"It took 4 years to get 10 lakh registered sellers on the GeM website, but after Covid, it just took 3 months to add another 10 lakh. GeM is convenient and transparent and information is easily available. Because of transparency, corruption issues in bidding, tenders are resolved. It also simplified this whole process since real-time information about all the tenders was available at one site," said Singhal. 

"The platform has helped close to 1.25 lakh small entrepreneurs, small shopkeepers across India to sell their goods directly to the government and achieve a stable market base. The GeM department is also working with the Ministry of Rural Development, Ministry of MSME, Ministry of Textiles, and Department of Minority Affairs. In the near future, more MSMEs will get registered," Suryakumar said. 

Garg said that the government is extremely aware of the sector’s potential for growth, especially with a platform like GeM at its disposal. It is for the benefit of MSMEs and SMEs that services like GeMSahay provide access to credit swiftly at the time of order acceptance itself.

"The government also has massive influence over buyer decisions, being able to nudge buyers into certain directions, like greener products or products that are made locally. The platform is on par with other privately owned marketplaces and the continuous upgrades are promising. By joining GeM, MSMEs get the opportunity to sell to stakeholders they otherwise wouldn’t access while also receiving assistance in terms of technology, marketing, etc," Garg said. 

Meanwhile, several experts believe that GeM will increase employment opportunities, business growth and the chance to get future-ready by conducting business in the digital world, especially in the MSME sector which witnessed devastating effects during the second wave of Coronavirus.


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prime minister narendra modi GeM 4.0 msme sector