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Apr 2012

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Government Procurement

Worried About Demand for Your Products? Try Government Organisations!!

Rishi Sonwal
Dec 2010

SMEs in India have been facing many problems. Availability of finance and marketing of their products or services are the most prominent among others. Many government organisations engaged in the promotion of SMEs have launched various schemes and assistances to the SMEs to resolve these two key problems.

Marketing problem is one which every SME has to confront with. Micro and small enterprises often found themselves unable to create demand for products or services. They don't have the budget to do expensive publicity or to display their products at prominent platforms. Result is that they are compelled to supply their products locally.

Government understands the problem of marketing problem among the SMEs and that' why have been constituting and implementing various schemes like Market Development Assistance (MDA). In MDA, there are many schemes like Participation in the international exhibitions/ fairs, financial assistance for using Global Standards (GS1) in barcoding, purchase and Price Preference Policy, etc.

Various government organisations procure different items from private companies. It is surprising that MSMEs which accounts for 45 per cent of total manufacturing output, have contribution of only 5 per cent in the total annual procurement of the government.

Purchase and Price Preference Policy

This is very popular scheme of the government which has been administered through the single point registration scheme of National Small Industries Corporation (NSIC). Under this policy, 358 items are reserved for exclusive purchase from MSME by the central government. Other facilities include free of cost tender documents, exemption from earnest money and security deposit and 15% price preference in the purchases for central government -for individual MSMEs

Marketing Intelligence Cell

Most the SMEs in India are in unorganized sector. They often don't have the information about the government procurement for various products. They don't know about the requirements of the different government bodies. On the other side there are many bodies or institutions which purchase various items especially from SMEs.

In order to give information about the purchases and requirement in various government organisations, NSIC has set up a Specialized Marketing Intelligence Cell. This Cell provides a single point contact to collect database relating to bulk buyers in government, public and private sectors, the detail of exporters, international buyers and technology suppliers. Besides, the information on trade leads and product wise buyers and sellers as well as database relating to Directorate General of Supplies & Disposals (DGS&D) suppliers with prices of their products. DGS&D is a central purchase & quality assurance organisation of the Government of India which comes under the Department of Supply of Ministry of Commerce.

Marketing intelligence cell also provides other information like international buyers for various products, technology suppliers, various schemes of the government and the procedure to avail them, etc.

Case Study

Harish Gawande is a paint manufacturer having a small plant on the outskirt of Pune under the name of Harish Chemicals. He sells different products locally through his own individual network and marketing expertise. His unit is registered in District Industries Center (DIC). Harish has a desire to participate in government tenders and wants to supply his products in government purchases.

Harish came to know about NSIC's Marketing Intelligence Cell. With the great hope he called the cell. Here are the excerpts –

Caller: I want to participate in government tenders and also want to supply in government purchases. What should I do?

MIC: You can visit the website of National Small Industries Corporation – www.nsicindia.com. You can get the complete information about product wise buyers and sellers. You also can get information about various tenders of government departments in across the country. You can search the tenders in your respective areas. You can get the information about the quality as well as the specifications required these tenders. You can see the different trade leads with special highlights on the website as well.

Caller: I have get registered my unit with DIC only. Can you let me know if there is any other registration required to participate in government tenders?

MIC: You should get registration done with for our Marketing Intelligence Cell. You will get the information about the latest government tenders, their specifications and other necessary information once the registration is done. You will also get exemption in Earnest Money Deposit (EMD) as well.

Caller: What is Earnest Money Deposit (EMD)?

MIC: The amount which unit has to deposit while participating in tender. Generally, EMD is two per cent of the total tentative tender cost. This money lapses if the unit which has got the tender fails to supply the required products.

Caller: I have already SSI registration. Do I need another registration?

MIC: You have to get registration with NSIC which is for government purchases. This registration is valid for all the government purchases and tenders.

Caller: What are the documents required and how much time it'll take?

MIC: It'll take approximately 45 days time for the completion of the registration process. You have to furnish SSI registration certificate, balance sheet of last three years and proprietorship documents for the registration.

Caller: What is the fee for the registration? I have invested more than ten lacs in plant and machinery?

MIC: It depends upon the size of the unit. As per the structure of your unit you will need to pay six to seven thousand for the registration. Of which two to three thousand is for NSIC registration and rest amount is against the inspection charges to be carried out by the local body of Ministry of MSME in your area.

Caller: What they will inspect for?

MIC: They inspect your plant, machinery, production quantity, production process, quality measures, etc.

Caller: What are the other charges?

MIC: There are no other charges for registrations however you have pay Rs.5000 on yearly basis to avail the services of NSIC's Marketing Intelligence Cell. Once you complete the registration, you can display your products on our website. You will get the e-mail alert of the tender preferred category and segment.

Caller: Is there any assurance of getting the tender if I get the registration done?

MIC: There is nothing like that. It depends upon the bidding amount you have given in the tender participation. However, there is a clause of Price Preference in which SSI units get preference of 15 per cent in the total tentative tender amount.

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