This MSME TALK blog provides you with an overview of what GOVERNMENT E-MARKETPLACE (GeM) is all about; the benefits it provides to buyers and sellers; how powerful it has proved to be for women led businesses to sell their products to government; how it has turned out to be a lucrative platform for the growth of startups and msmes; Who can be buyers and sellers on GeM; advantages of GeM as a buyer and seller; insights into relevant statistics such as number of buyers and sellers registered, procurement value; and also, comparison of gem to similar international portals.
Public procurement involves purchase of goods and services by governments with an aim to not only carry day-to-day tasks but to also create social and economic infrastructure in the country. The sector bears the responsibility of utilizing taxpayers’ money efficiently. If used well, public procurement could have a multiplier effect at national, local and hyper-local levels.
In India, public procurement accounts for roughly 20-22% of the GDP. Therefore, efficient public procurement is an important aspect for achieving accelerated growth and development in India.
Public procurement system prior to GeM consisted of a manual process for invitation of bids, bid evaluation and finalization of the winning bid. This was prepared by the Directorate General of Supplies and Disposals which was an over 100-year-old government procurement arm.
There were various limitations and inefficiencies in the earlier tendering system such as absence of common procurement procedure, manual procedures susceptible to manipulation, cartelization among bidders and paper-based, cumbersome mechanism which became an albatross around the neck.
In order to improve transparency of decision-making in the public procurement process and to reduce malpractices, an online marketplace for public procurement GeM (Government electronic Marketplace) was launched in August, 2016 by the Ministry of Commerce and Industry, Government of India to facilitate eprocurement of commonly used goods and services required by central and state government ministries, departments, public sector undertakings and autonomous institutions at competitive prices with assurance of quality and timely delivery.
Government e-Marketplace (GeM) is providing increasing market access to seller groups like MSEs, Women SHGs, Startups reinforcing the Make in India Initiative and Govt of India’s policy to promote local MSEs.
Objective of new public Procurement System, GeM
- The platform aims to increase transparency, efficiency and speed in public procurement along with inclusion.
- It provides all modes of procurement, viz., direct purchase, e-bidding, bidding with reverse e-auction and direct reverse auction.
- The digital platform enables economies of scale, efficient price discovery and dissemination of best practices.
How GeM helps women led business to sell products to the Government
The Union Government on January 14, 2019 launched the ‘Womaniya on Government e Marketplace (GeM)’, an initiative to enable women entrepreneurs and Women Self-Help Groups (WSHGs) to sell handicrafts, handloom, accessories, and other products directly to Government departments and institutions.
The Womaniya on GeM initiative aims to develop women entrepreneurship on the margins of society to achieve gender-inclusive economic growth.
Key Highlights of the ‘Womaniya on GeM’ initiative:
- The Womaniya homepage (gem.gov.in/womaniya) will inform procurement officers in various government ministries, departments and CPSEs about the drive to promote procurement of common use goods and services from women entrepreneurs.
- Products like handicrafts and handloom, accessories, jute and coir products, home decor and office furnishings are categorised for ease-in-procurement.
- The initiative aligns with the Government’s initiatives for MSMEs, especially to reserve 3 percent in government procurement from women entrepreneurs.
It is also actively engaging and collaborating with various national and state women organizations for providing training to women entrepreneurs on seller registration, product catalogue management, bid participation, order fuII fillment and invoice generation processes.
GeM has also undertaken similar initiatives to promote MSMEs and Startups on the platform.
“Startup Runway” – a unique concept initiated by GeM to promote entrepreneurship through innovation was launched on 19th February 2019. This program is an opportunity for agile and lean Startups to reach out to the universe of Government Buyers by offering products and services that are unique in concept, design, process and functionality through StartUp Runway corner.
In 2020-21, MSE sellers and service providers on GeM were contributing above 57% of the total order value on GeM, which is a testament to GeM’s success in not only onboarding but also engaging with the MSEs to help them participate in public procurement.
As of APRIL, 2022, GeM has more than 13,300 Startups, 3,788 Self Help Groups, 4,500 TRIFED members, 1.49lakh weavers, 28,421 artisans, 129,933 women entrepreneurs, 38080 SC/ST entrepreneurs.
UDHYAM REGISTRATION & GeM
MSME Ministry launched a new Udyam Registration Scheme in July 2020 for all MSME businesses wherein, new Udyam form has a provision to take consent from businesses for auto-registration on GeM portal.
In order to further smoothen the seller registration process for MSEs on the portal, GeM has operationalized API integration with Udyam Registration databases and details of MSMEs, who have given their consent to share their details with GeM, are being auto imported on GeM for creation of their seller profile and notification
As per MSME Report 20-21 & 21-22 ,the number of Registered MSE sellers and service providers on GeM increased from 4,06,936 to 7,41,756 through the years 20-21 and 21-22. And, the percent of orders value also moved up from 57.92% to 59.73%
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General Financial Rules (GFRs) are a compilation of rules and orders of Government of India to be followed by all while dealing with matters involving public finances. as per Rule 149 of General Financial Rules-2017 ,Common use Goods and Services available on GeM are required to be procured mandatorily through GeM. The Ministries or Departments can make their own arrangements for procurement of goods and services that are not available on GeM. As per provisions of Rule149 , Purchases:
- Up to Rs.25,000/- through any of the available suppliers on the GeM, meeting the requisite quality, specification and delivery period.
- Above Rs.25,000/- and up to Rs.5,00,000/- through the GeM Seller having lowest price amongst the available sellers of at least three different manufacturers, on GeM, meeting the requisite quality, specification and delivery period.
- Above Rs.5,00,000/- through the supplier having lowest price meeting the requisite quality, specification and delivery period after mandatorily obtaining bids, using online bidding or reverse auction tool provided on GeM
The Government Buyers may ascertain the reasonableness of prices before placement of order using the Business Analytics (BA) tools available on GeM including the Last Purchase Price on GeM, Department’s own Last Purchase Price etc.
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What can be sold on GeM
On GeM Portal there are around 54 lakh products listed across 9,702 product categories and 279 service categories as FY 22 .
To name a few, following service categories and products are served and sold to GeM:
- Manpower based services,
- cleaning and sanitation services,
- Canteen Services,
- Goods and transport services,
- Vehicle and ambulance services
And, Products like:
- Office Furniture including office chairs and computer desks etc
- Medical instruments,
- Computers and Laptops
- To support rural artisans products like office decor, event souvenirs
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Who are the buyers on GeM?
- Central Government;
- State Government ministries and departments (including subordinate offices);
- Central and State autonomous bodies;and Advertisement
- Central and State PSUs and local bodies.
- And now, cooperatives
NUMBER OF BUYERS ON GeM
Over 53,000 buyers have been onboarded on GeM in the past five years, roughly 10,000 buyers annually.
Advantages for Buyers on GeM
- Provide transparency and ease of buying.
- Makes available search, compare, select and buy facilities.
- Price Trends and Price Comparison From Multiple Suppliers.
- Direct notifications to sellers & Integrated Payment System.
- Multiple consignees can be selected for Services.
- Buyers get the option to cancel the Product contract(s) even if the invoice has been generated by seller-provided 15 days have expired from the delivery period.
- To improve fair participation in Bid / RA, GeM now ensures that at least 3 sellers have participated and offered. products from at least 2 different OEMs. In case a buyer wants to proceed with less than 3 Resellers or two OEMs/Brands, they have to upload approval from the Competent Authority.
Who are the sellers on GeM?
- Proprietary firm;
- Partnership firm;
- Limited Liability Partnership;
- Private Limited Company;
- Public Limited Company;
- Registered society;
- Statutory bodies.
NUMBER OF SELLERS
Approx 40 lakh sellers were registered on GeM, of which 7.65 lakh were micro and small sellers with 59.73 per cent share in the order value of Rs 2.28 lakh crore so far, even though all the registered sellers may not be active but still they are having a large share in the order value
The seller needs to satisfy the following eligibility criteria for getting eligible to be registered on the GeM portal-
- The seller should be an OEM (i.e., Original Equipment Manufacturer); or
- The seller should be an entity having the authorization to sell products that are manufactured by OEM.
- It should be noted here that the following categories are considered as OEM (i.e., Original Equipment Manufacturer) and accordingly are eligible to sell products on the GeM portal-
- Manufacturer;
- Importer and authorized sellers;
- Brand owners and third party manufacturing;
- Service providers;
- Assemblers
To register on GeM as a seller/buyer, Sign up on GeM portal by visiting https://gem.gov.in/
Advantages for sellers on GeM
- National Public Procurement Market Access.
- Special Provisions and Sections given to Start-Ups & MSMEs who register on GeM.
- Technically Advanced and Online, making it paperless, contactless yet a transparent platform.
- Online grievance redressal for quick resolution mechanism.
- One-stop shop for marketing with minimal efforts.
- One-stop shop for bids / reverse auction on products / services.
- New Product Suggestion facility available to Sellers.
- Seller friendly dashboard for selling, and monitoring of supplies and payments.
- Consistent and uniform purchase procedures.
| CRITERIA | FIGURES |
| Products/Services Listed | Over 54 lakh across 9,702 product categories and 279 service categories. |
| Sale-Purchase Volume till now | About 2.28 Lakh Crore |
| Gross Merchandise Value to GDP % | 0.50% |
| Number of Buyers | Over 53,000 |
| Number of Sellers | Over 40 Lakh |
| Number of MICRO SMALL ENTERPRISES (MSE) as sellers | Over 7.76 Lakh |
| Share of MICRO SMALL ENTERPRISES (MSE)in Order Value till FY 22 | 59.73 % |
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Sale-Purchase Volume on GeM Procurement:
Procurement of goods and services from government portal GeM crossed Rs 1 lakh crore during FY1-22 on account of a sharp increase in buying activities by different ministries and departments.
COMPARISON OF GEM TO INTERNATIONAL PROCUREMENT PORTALS With over 40 lakh sellers and 59,000 buyers, GeM is bigger than comparable portals in Singapore and South Korea, but GMV is much lower as a percentage of GDP. | ||||
| CRITERIA | ChileCompra (CHILE) | GeBIZ (SINGAPORE) | KONEPS (KOREA) | GeM (INDIA) |
| Annual GMV | $13Bn | $18Bn | $63Bn | $13.4Bn |
| Suppliers | 125000+ | 42000+ | 340000+ | 4002014+ |
| Buyers | 15000+ | 10000+ | 44000+ | 59130+ |
| GMV as a percentage of GDP | 4.40% | 5% | 3.90% | 0.50% |
GMV–Gross Merchandise Value: The value of Goods and Services sold via the site. Source: TOI 25 March,22
1. Who can buy/purchase through GeM?
All Central government and State Government Ministries/Departments including its attached/subordinate offices, Central and State autonomous bodies, Central and State Public Sector Units and local bodies etc. are authorized to make procurement through GeM portal.
2.In how many days does my service offering(s) get approved?
The service offering is approved within 72 working hours of the approved time.
3.Is Aadhaar necessary for Seller Registration?
No, Aadhaar is no longer mandatory for Seller Registration, sellers can also use personal PAN for Identity Verification while doing the seller registration
4.Which email should I provide for registration?
You must provide the official email ID of the person managing the account to not miss out on the updates.
5.What is a Log interval?
Log interval is the time period after which the invoice has to be generated by the vendor. The time duration for the generation of the bill could be 30 days and is generated on a pro-rata basis as per the contract
6.Why is the seller’s name not given along with the product on GeM?
To avoid biases in the selection of the seller, for a particular purchase, the seller’s name is no longer disclosed on GeM until the Buyer makes a purchase decision.
7.What could be the reason for variation in prices between GeM and other Market Places?
The price given on GeM is different from other marketplaces, due to the following factors:
- The prices offered on GeM include all taxes.
- Products offered on GeM may have a different warranty period.
- An onsite warranty is offered for some products.
- The payment terms of the transaction on GeM is different from other marketplaces
8.Is GeM registration beneficial for startups?
GeM provides an open and wide marketplace for startup companies. The GeM has launched a new initiative for the startups in partnership with Startup India known as GeM Startup Runaway. This program has been initiated to promote entrepreneurship through innovation in India. However, to enjoy all the benefits of the GeM Startup Runaway program you must register your business with the Department of Promotion for Industry and Internal Trade(DPIIT).
9.What is Caution money paid by the sellers?
It is true that sellers are not required to pay any registration fees under the GeM portal. However, they are required to deposit a fixed amount as a ‘caution money’ deposit. Caution money is introduced to bring descipline among sellers. All sellers on GeM would be required to deposit a fixed amount with GeM depending upon the turnover of the seller. The same is explained in the table below- Turnover of the seller and accordingly, amount of caution money to be deposited is as under:
- Less than 1 Crore- INR 5,000
- Between 1 Crore to 10 Crores- INR 10,000
- More than 10 Crores- INR 25,000
10.When would the caution Money be forfeited?
Sellers reject or do not accept the order within the given timeline leading to auto cancellation of order.
- Failure of seller in executing the GeM contract.
- If the seller withdraws the bid from GeM within the validity of the bid.
- Fails to furnish requisite performance security.
Experts can share their insights and knowledge with a global audience through their Blog on MSME TALK website. Reach us at connect@msmetalk.com to explore it.