December 17, 2009
New Kerala. com
Micro, small and medium enterprises (MSMEs) in India are discouraged in public procurement mainly due to unavailability of financial guarantees, lack of knowledge about tender procedures and new opportunities and large size of contracts, according to a research.
The process of the public procurement is not at all user-friendly and discourages MSMEs from even responding to the Government tenders, says the study on 'Procurement Provision for MSMEs by nations across the globe', conducted by Milagrow IMT Center of Excellence.
''The size of public procurement in India is huge and can provide a high potential for growth to the MSME sector. It covers a wide range of supplies, services and works required by governments, local authorities and public organisations. The challenges that the MSMEs face in the area of public procurement are financial guarantees required, high qualification levels and required certification, lack of knowledge about tender procedures, large size of contracts and low access to information about new opportunities, cost of preparing the proposal and huge administrative burdens,'' the study highlights.
Releasing the study in Milagrow World SME Conference 2009, which concluded here today, Mr Rajeev Karwal, Founder CEO of Milagrow Business and Knowledge Solutions said, ''The SME sector, which contributes almost 40-50 per cent of the economic activity has been an underserved, manipulated and much abused sector because of a variety of reasons. Because of misplaced regulatory and business compulsions, the sector never got its due.
It is my dream that these hidden jewels of the Indian Industry shine brighter than ever now, especially when the Indian market place is growing.'' The Study recommends that to ensure a secured place for SMEs in public procurement market, at least 20 per cent of all public purchases must be procured from MSMEs.
''This will act as a major safeguard for MSMEs and will be a direct measure for opening their access to the public procurement market,'' it recommends.
Besides, the tender process must be simplified for the SMEs and a guide should be provided to encourage higher participation.
MSMEs in India contribute 39 per cent of the industrial output, 33 per cent of exports, 31 million in employment with exposure to greater opportunities for expansion and diversification across the sectors.
