IIISIIIE: .;;;MICRO, SMAll & MEDIUIA ENTERPRJSES

~, ~ ~ ~ ~OUR STRE,'IGiH. m R

~- ~e=+1."<WTtj 3fri ~ ~ ~1C1q~ ~I ~ ~-110011

~ ~ ~ ' MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISESU /""" UDYOG BHAWAN, NEW DELHI.110 011

L.-- .-f Tel. : +91-11-23062107 Fax: 23063045~ <: roC

C..Q~:eo tf.I- .:~X);.~~~) ~e~~(e p\-O~",~~ l'f5'~) D.O.21(1)/~011-M.A.ApnI 25, 2012

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~'~,(i,(C/"Ir'(R.""T<. MATHUR I.A.S.Secretary to the Government of India

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Dear Shri

In exercise of the powers conferred in section 11 of the Micro, Small and MediumEnterprises Development (MSMED) Act 2006, the Government has notified a new PublicProcurement Policy for Micro & Small Enterprises (MSEs) (copy enclosed) effective from 1 st

April, 2012. The Policy mandates that 20% of procurement of annual requirement of goodsand services by all Central Ministries / Public Sector Undertakings will be from the micro andsmall enterprises. Government has also earmarked a sub target of 4% procurement of goods &services, out of the 20%, from MSEs o\wed by SC/ST Entrepreneurs. The policy has a timeframe of three years beginning 2012-13 for implementation after which it will becomemandatory. It is expected that the policy will help to promote MSEs by improving their marketaccess an,d competitiveness through increased participation by MSEs in Government purchasesand encouraging linkages bet\veen MSEs and large enterprises.

2. In brief the Policy entails:

i) With effect from 2012-13 every Central Ministries/Departments/PSUs shall setan annual goal for procurement from the MSE sector at the beginning of theyear, with the objective of achieving an overall procurement goal of minimum20 per cent of the total annual purchases of the products or services produced orrendered by MSEs from the latter in a period ofthr~e years.

ii) Out of 20% target of annual procurement from MSEs, a sub-target of 4% (i.e.,20% out of 20%) will be earmarked for procurement from MSEs o\\'ned bySC/ST entrepreneUrs. However, in the event of failure of such MSEs toparticipate in the tender process or meet the tender requirements and the L 1price, the 4% sub-target for procurement earmarked for MSEs owned by SC/STentrepreneurs \vill be met from other MSEs.

At the end of 3 years, (i.e. from 2015-16) the overall vrocurement goal ofminimum 20% \vill be made mandatory. Non-confoffiling Departments will berequired to provide reasons for the same to the Review Committee set up underthe Policy.

iii)

Contd..2

iv) ThcLI-orufro]

upeli,

participating MSEs in a tender, quoting price within the band of-15% may also be allowed to supply a portion of the requirement by19ing down their price to the Ll price, in a situation where Ll price isn someone other than an MSE. Such MSEs may be allowed to supplyto

20% of the total tendered value. In case of more than one such;ible MSE, the supply will be shared equally.

v) WiMipr<Jthe

th effect from 2012-13, every Central Governmentlistrles/Departments/PSUs will report the goals set with respect tocurement to be met from MSEs and the achievement made thereto inIr respective Annual Reports.

vi) Th~ Central Ministries/Departments/Public Sector Undertakings will

co tinue to procure 358 items from MSEs, which have been reserved for

ex lusive purchase from them (Details at Appendix of the Policy).

reduce transaction cost of doing business, Micro and Small Enterprises11 be facilitated by providing them tender sets free of cost, exemptingro and Small Enterprises from payment of earnest money, adopting e-curement to bring in transparency in tendering process and setting up aevance Cell in the Ministry of Micro, Small and Medium Enterprises.

ToShE

Miprcor

ix)

P~ paration of an Annual Procurement Plan 2012-13 for purchases and

up oading the same on official website, so that Micro and Small

E erprises may get advance infonnation about requirement of

pr curement agencies.

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D.O. 21(1)/2011-M.A.

Apri125,2012

4.

Encl: As above Yours sincerely,

}/-\;if---(R.K.Mathur)

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» oep~ 4-.\17. ~. ~~, ;rT.Jl. W.~. ~ ~'(q,I,(

If)K. MATHUR I.A.S.Secretary to the Governme t of India ~~. ;c;rg 3frv. '+J't:Zr1=1 ~ ;j~Ic;jq

~ ~I ~~-110011MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

UDYOG BHAWAN; NEW DELHI-110 011

t::""' 4!e..V,. 1 ...A Tel. : +91-11-23062107 Fax: 23063045~ C--{ ~ '" <. e-.

/ D.O. 21(1)/2011-M.A.

Apri125,2012

Dear Shri

In exercise f the powers conferred in section 11 of the Micro, Small and MediumEnterprises Develo ment (MSMED) Act 2006, the Government has notified a new PublicProcurement Policy for Micro & Small Enterprises (MSEs) (copy enclosed) effective from 1 stApril, 2012. The P licy mandates that 20% of procurement of annual requirement of goods andservices by all Cen al Ministries / Public Sector Undertakings will be from the micro and smallenterprises. Gove ent has also earmarked a sub target of 4% procurement of goods & services,out of the 20%, fro MSEs owned by SC/ST Entrepreneurs. The policy has a time frame of threeyears beginning 201 -13 for implementation after which it will become mandatory. It is expectedthat the policy will elp to promote MSEs by improving their market access and competitivenessthrough increased p icipation by MSEs in Government purchases and encouraging linkagesbetween MSEs and I ge enterprises.

2. In brief the P licy entails:i) With ffect from 2012-13 every Central Ministries/Departments/PSUs shall set an

annua goal for procurement from the MSE sector at the beginning of the year, withthe Ob~ ctive of achieving an overall procurement goal of minimum 20 per cent ofthe to annual purchases of the products or services produced or rendered byMSEs from the latter in a period of three years.

I'

ii) Out 0 20% target of annual procurement from MSEs, a sub-target of 4% (i.e., 20%out 0 20%) will be earmarked for procurement from MSEs owned by SC/STentrep eneurs. However, in the event of failure of such MSEs to participate in thetender process or meet the tender requirements and the Ll price, the 4% sub-targetfor pr curement earmarked for MSEs o\\l1ed by SC/ST entrepreneurs will be metfrom 0 her MSEs.

iii) At the~ .nd of 3 years, (i~e. from 2015-16) the ~verall procurement .goal of mi~mum20% 11 be made mandatory. Non-conformmg Depaft171ents WIll be requIred toprovid reasons for the same to the Review Committee set up under the Policy.

iv) The p icipating MSEs in a tender, quoting price within the band of L1 + 15% mayalso b allowed to supply a portion of the requirement by bringing down their pric~to the 1 price, in a situation where L 1 price is from someone other than an MSE.Such SEs may be allowed to supply up to 10% of the total tendered value. In caseof mor than one such eligible MSE, the supply will be shared equally.

Contd...2

k ~~+

I,r-

Secretary to the Government of India

D.O. 21(1)/2011-M.A.April 25, 2012

~ 0- ~ D\.. r..'.I-f ~ -~'""1""..Dear ~

In exercise of $e powers conferred in section 11 of the Micro, Small and MediumEnterprises Developme~t (MSMED) Act 2006, the Government has notified a new PublicProcurement Policy for Micro & Small Enterprises (MSEs) (copy enclosed) effective from 1stApril, 2012. The PolicYimandates that 20% of procurement of annual requirement of goods andservices by all Central Ministries / Public Sector Undertakings will be from the micro and smallenterprises. Governmeht has also earmarked a sub target of 4% procurement of goods &services, out of the 200/4, from MSEs owned by SC/ST Entrepreneurs. The policy has a timeframe of three years beginning 2012-13 for implementation after which it will becomemandatory. It is expect~ that the policy will help to promote MSEs by improving their marketaccess and competitiven~ss through increased participation by MSEs in Government purchasesand encouraging linkage$ between MSEs and large enterprises.

I'

2. In brief the Policy entails:

i) With effett from 2012-13 every Central Ministries/Departments/PSUs shall setan annual\ goal for procurement from the MSE sector at the beginning of theyear, with the objective of achieving an overall procurement goal of minimum 20per cent oif the total annual purchases of the products or services produced orrendered b~ MSEs" from the latter in a period of three years.

ii) Out of 20% target of annual procurement from MSEs, a sub-target of 4% (i.e.,20% out ~f 20%) will be earmarked for procurement from MSEs owned bySC/ST en~epreneurs. However, in the event of failure of such MSEs toparticipate I in the tender process or meet the tender requirements and the L 1price, the 4% sub-target for procurement earmarked for MSEs owned by SC/STentreprene~s will be met from other MSEs. I

iii) At the enq of 3 years, (i.e. from 2015-16) the overall procurement goal ofminimum ~O% will be made mandatory. Non-conforming Departments will berequired to I provide reasons for the same to the Review Committee set up underthe Policy. \

~Contd..2

,~, "i;rij ~ ~ i3U1IOUR STRENGTH. m.

~... ~~, ~ 3fr::f. ~ ~ ~?llc;I~~ 1rcr;:r, ~ ~-110 011

MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

UDYOG BHAWAN, NEW DELHI-110 011I~ ," ~ c! "Y 4.~ (:!::. ~ .~ ') -Tel +91-11-23062107 Fax 23003045

-2-

D.O. 21(1)/2011-M.A.

Apri125,2012

iv)

v) With effect from 2012-13 every Central GovernmentMinistri s/Departments/PSUs will report the goals set with respect toprocure ent to be met from MSEs and the achievement made thereto in theirrespecti Annual Reports.

vi)

Contd...3

r w. ~. ~~, ~.>1.'\It.~,~~,(~I,( .

~~~ MATHUR I A S--.". ~~"I ...

Secretary to the Government of India

,C"--D.O. 21(1)/201 I-M.A.

April 25, 2012...,

~"~)Dear;

"

In exercise of the powers. conferred in section 11 of the Micro, Small and MediumEnterprises Development (MSMED) Act 2006, the Government has notified a new PublicProcurement Policy for Micro & Small Enterprises (MSEs) (copy enclosed) effective from 1stApril, 2012. The Policy mandates that 20% of procurement of annual requirement of goods andservices by all Central Ministries / Public Sector Undertakings will be from the micro and smallenterprises. Government has also earmarked a sub target of 4% procurement of goods & services,out of the 20%, from MSEs owned by SC/ST Entrepreneurs. The policy has a time frame of threeyears begi~g ~012-13 for implementation ~er whi.ch it ~ll become 1i1andatory. It is ~~pectedthat the polIcy WIll help to promote MSEs by Improvmg theIr market access and competitivenessthrough increased participation by MSEs in Government purchases ~d encouraging linkagesbetween MSEs and large enterprises.

2. In brief the Policy entails:~

i) With effect from 2012-13 every Central Ministries/Departments/PSUs shall set anannual goal for procurement from the MSE sector at the beginning of the year,with the objective of achieving an overall procurement goal of minimum 20 percent of the total~annua1 purchases of the products or services produced or renderedby MSEs from the latter in a period of three years.

ii) Out of 20% target of annual procurement from MSEs, a sub-target of 4% (i.e.,20% out of 20%) will be earmarked for procurement from MSEs owned by SC/STentrepreneurs. However, in the event of failure of such MSEs to participate in thetender process or meet the tender requirements and the Ll price, the 4% sub-targetfor procurement earmarked for MSEs owned by SC/ST entrepreneurs will be metfrom other MSEs.

iii) At the end of 3 years, (i.e. from 2015-16) the overall procurement goal ofminimum 20% will be made mandatory. Non-conforming Departments will berequired tc provide reasons for the same to the Review Committee set up under thePolicy.

iv) The participating MSEs in a tender, quoting price within the band of L1 + 15% mayalso be allowed to supply a portion of the requirement by bringing down their priceto the L1 price, in a situation where L1 price is from someone other than an MSE.Such MSEs may be allowed to supply up to 20% of the total tendered value. Incase of more than one such eligible MSE, the supply will be shared equally.

Contd..2

I 'tl~.~~~~OUR STRENGTH. ~.

~~. ~ 3frv. ~ ~ ~~It1~~ 1i'Cf";::r. ~ ~-110 011

MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

UDYOG BHAWAN, NEW DELHI-110 011

Tel. : +91-11-23062107 Fax: 23063045

-

-2-

~;z=~~ D.O. 21(1)/2011-M.A.April 25, 2012

v) With effect from 2012-13 every Central GovernmentMinistries/Departments/PSUs will report the goals set with respect to procurementto be met from MSEs and the achievement made thereto in their respective Annual

Reports.

vi) The Central Ministries/Departments/Public Sector Undertakings will continue toprocure 358 item$. from MSEs, which have been reserved for exclusive purchasefrom them (Details at Appendix of the Policy).

For enhancing the participation of SCs/STs in the Government procurement, theCentral Government Ministries/Departments/PSUs will take necessary stepsincluding organizing special Vendor Development Programmes, Buyer-SellerMeets etc. '

To .r~duce transac~o~ cost of doing business, Micro ;;nd Sma1~ Ente~rises shall befacIlItated by provIdIng them tender sets fre~ of cost, exempting MIcro and SmallEnterprises from payment of earnest money, -adopting e-procurement to bring intransparency in tendering process and setting up a Grievance Cell in the Ministryof Micro, Small and Medium Enterprises.

ix) A 'Grievance Cell' would be set up in the Ministry of MSME for redressing thegrievances of MSEs in Government procurement. In addition, a ReviewCommittee under my Chairmanship shall periodically review implementation ofthis policy.

3. Paras 14 and 15 of the Policy contain special provisions for defence procurements whichinter-alia stipulate that for the purposes of this policy defence armament imports shall not beincluded in computing 20% goal for Ministry of Defence. In addition, defence equipments likeweapon systems, missiles etc. shall remain out of purview of the Policy. Further, monitoringof goals under the Policy shall be done by the Ministry of Defence itself in accordance withsuitable procedures to be established I?Y them.

4. I would request you to kindly issue necessary instructions for taking necessary steps toimplement this policy. In particular, following may be considered:

Preparation of an Annual Procurement Plan 2012-13 for purchases and uploadingthe sanle on official website, so that Micro and Small Enterprises may get advanceinfonnation about requirement of procurement agencies.

(a)

Appointment of a senior nodal officer not below the level of Executive Director forimplementation of the Policy and for redressing grievances.

(b)

Contd..3

~ -3-

D.O. 21(1)/2011~M.A.April 25, 2012

(c) The website of your organization may contain a specific reference/ Ifnk foradvertising such procurement. i

Cd) Your website may also contain a grievance redressal mechanism for addressingany complaints received in this regard by appropriate levels under supervision asmentioned under (b)4bove.

4. We would be very happy to help by removing any doubts you may have. Such clarifications, ifneeded, maybe addressed to me and lor Development Commissioner, MSME, at the following emails:

secretarv-msme@nic.in(for Secretary, MSME)dcmsme@nic.in (for Development Commissioner-MSME)

5. I look forward to your help and cooperation in effective implementation of the Policy....

"'~ y-~~ I~ r .'. ~

y ours s~Encl: As above

.(R.K.Mathur)

't:~.-;; ~~, 'J1"{.Jl. \'1.f~~, ~ ~,<q,I,(

~. K. MATHUR I.A.S.Secretary to the Government of India

k

IIISIIIE:=MICRO, SMALL & MEDIUM ENTERPRISES

"i~,~:d/'1.~~OUR STRENGTH. m.

~~ ~~. ~ 3fR ~ ~ ~~I(;rfq

~ 1f(f;:r, ~ ~-110 011

MINISTRY OF MICRO, SMALLAND MEDIUM ENTERPRISES

UDYOG BHAWAN, NEW DELHI-110 011

Tel. : +91-11-23062107 Fax: 23063045

) t t~:

cJ (

D.O. 21(1)/2011-M.A.April 25, 2012

Dear Shri

In exercise of the powers conferred in section 11 of the Micro, Small and MediumEnterprises Development (MSMED) Act 2006, the Government has notified a new PublicProcurement Policy for Micro & Small Enterprises (MSEs) (copy enclosed) effectivefrom 1st April, 2012. The Policy mandates that 20% of procurement of annualrequirement of goods and services by all Central Ministries / Public Sector UndertakingsWill be from the micro and small enterprises. Government has also earmarked a subtarget of 4% procurement of goods & services, out of the 20%, from MSEs owned bySC/ST Entrepreneurs. The policy has a time frame of three years beginning 2012-13 forimplementation after which it Will become mandatory. It is expected that the policy willhelp to promote MSEs by improving their market access and competitiveness throughincreased participation by MSEs in Government purchases and encouraging linkagesbetween MSEs and large enterprises.I'

2. In brief the Policy entails:i) With effect from 2012-13 every Central Ministries/DepartmentslpSUs

shall set an annual goal for procurement from the MSE sector ~t thebeginning of the year, with the objective of achieving an o{rerallprocurement goal of minimum 20 per cent of the total annual purchases ofthe products or services produced or rendered by MSEs from the latter in a

period of three years.

ii) Out of 20% target of annual procurement from MSEs, a sub-target of 4%(i.e., 20% out of 20%) will be earmarked for procurement from MSEsowned by SC/ST entrepreneurs. However, in the event 'of failure of suchMSEs to participate in the tender process or meet the tender requirementsand the L1 price, the 4% sub-target for procurement earmarked for ~SEsowned by SC/ST entrepreneurs will be met from other MSEs.

IAt the end of3 years, (i.e. from 2015-16) the overall proctlrement goal of

minimum 20% will be made mandatory. Non-conforming Departmentswill be required to provide reasons for the same to the Review Committee

set up under the Policy.

iii)

Contd...2

-2-

D.O.21(1)/2011-M.A.April 25, 2012

iv) The participating MSEs in a tender, quoting price within the band ofL 1 + 15% may also be allowed to supply a portion of the requirement bybringing down their price to the Ll price, in a situation where Ll price isfrom someone other than an MSE. Such MSEs may be allowed to supplyup to 20% of the total tendered value. In case of more than one sucheligible MSE, the supply will be shared equally.

/

v) With effect from 2012-13 every Central GovernmentMinistries/DepartmentsIPSUs will report the goals set with respect toprocurement to be met from MSEs and the achievement made thereto intheir respective Annual Reports.

vi) The Central Ministries/Departments/Public Sector Undertakings willcontinue to procure 358 items from MSEs, which have been reserved forexclusive purchase from them (Details at Appendix of the Policy).

For enhancing the participation of SCs/STs in the Governmentprocurement, the Central Government Ministries/Departments/PSUs willtake necessary steps including organizing special Vendor DevelopmentProgrammes, Buyer-Seller Meets etc.I-

To reduce transaction cost of doing business, Micro and Small Enterprisesshall be facilitated by providing them tender sets free of cost, exemptingMicro and Small Enterprises from payment of earnest money, adopting e-procurement to bring in transparency in tendering process and setting up aGrievance Cell in the Ministry of Micro, Small and Medium Enterprises.

ix) A 'Grievance Cell' would be set up in the Ministry of MSME forredressing the grievances of MSEs in Government procurement. Inaddition, a Review Committee under my Chairmanship shall periodicallyreview implementation of this policy.

3. I would request you to kindly issue necessary instructions for taking necessarysteps to implement this policy. In particular, following may be considered:

I(a) Preparation of an Annual Procurement Plan 2012-13 for purchases and

uploading the same on official website, so that Micro and SmallEnterprises may get advance information about requirement of

procurement agencies.

(b) Appointment of a ,senior nodal officer not below the level of ExecutiveDirector for implementation of the Policy and for redressing grievances.

Contd..3