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Removing Prior Experience, Turnover & EMD Criteria

In order to promote inclusiveness, all DPIIT recognized Startups have been provided functionality to list their products and services on GeM portal. The portal provides exemption to Startups from criteria of ‘prior experience’, ‘turnover’ and ‘submission of EMD’ to provide equal opportunity to young entrepreneurs.

As of March 2019, the GeM platform has crossed INR 23,000 crore in terms of value of goods/ services and 16.4 lakh in terms of volume of transactions. More than 2.14 lakh sellers offer 8.8 lakh products on the GeM platform which has 34,000 Government organizations as buyers and 24 states and UTs has signed an MoU with GeM to make the platform their core portal for procurement.

Launched on 19th February 2019, “StartUp Runway” is a unique concept initiated by GeM to promote entrepreneurship through innovation. 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.

DPIIT (Department for Promotion of Industry and Internal Trade) certified Startups are allowed to offer their products/services for procurement on Government e Marketplace (GeM).

StartUp Runway aims to:

  • Enable Startups to introduce their unique innovations to government and PSU buyers.
  • Assess utility and market acceptability of startup products/services.
  • Spur hyper-local job-creation and wealth generation to achieve inclusive growth through startups

The overview of application process for Startups to register and sell on GeM is highlighted below. More details are available on GeM platform.

State Government notified a Government order dated 13.3.2018 which has included following provisions for Startups in public procurement:

  • There would not be any minimum turnover requirement from Micro, Small Enterprises and Startups in public procurement process,
  • All State Departments and agencies will additionally relax condition of prior experience with respect to Startups in all public procurement subject to meeting of quality and technical specifications.

Further, State Government’s Finance Department has exempted all eligible Startups and local MSEs from submission of Earnest Money Deposit (EMD) while participating in tenders of Government Department and agencies. The performance security (if any) has been reduced to 25% of the prescribed amount for Startups. Related Government orders have also been uploaded on Startup Odisha Portal

Government of Gujarat, vide Industries and Mines Department Resolution on 11.4.2018 removed the criteria of "prior experience", “turnover”, “tender fee” and “submission of EMD” for encouraging Startups to participate in public procurement. The instructions to all the State Department is as below:

  • Exemption is given for obtaining details of ‘turnover’ for things and products under Micro and Small units & Startups. Hence, the condition may not be kept by the purchase officer.
  • Exemption is given for ‘prior experience’ in tender document for Micro and Small units & Startups. The tender will not include any such condition of prior experience.

The State Government has further directed all the offices to scrupulously follow the above mentioned provisions. The State departments have also included above clauses in their respective tenders. Further details on notification is provide on Startup Portal of Gujarat

Government of Haryana has done away with key qualification criteria of ‘turnover’ and ‘experience’ for Startups participating in public procurement process. The notification ‘Concessions/ Benefits in Public Procurement to Startups/ First Generation Entrepreneurs in the State’ was released by the State Department of Industries & Commerce on 3rd January 2019. According to the notification, startups will be treated at par with the MSEs in public procurement process subject to meeting other technical specifications as part of qualifying requirements for the procurement.

Startups based in the state, having turnover of less than INR 25 crore, would be eligible to participate along with big companies. As per estimates, around 750 startups are likely to benefit with the relaxation in norms. As per estimates, around 750 startups are likely to benefit with the relaxation in norms.

Additionally, if their quoted prices are within band of L1 (lowest bidder) plus 15% or in plain terms if Startup quoted prices are higher by 15% as compared to the lowest bidder and Startup is ready to match with the lowest bidder, they will be eligible to bag the contract subject to fulfillment of other terms and conditions.

Besides this, the government has exempted the startups from payment of tendering fee and Earnest Money Deposit (EMD) subject to conditions as per eligibility.

Preference to Startups in State/UT Government Procurement

Rajasthan Government is giving opportunities to its entrepreneurs to work with State Government directly and there is no tendering required through an innovative program ‘Challenge for Change’.

Department of Information Technology and Communications, Government of Rajasthan has conceptualized ‘Challenge for Change’- designed especially to give your any opportunity to partner with State Government, implement their ingenious solutions and get direct work orders worth INR 1 crore each.

Challenge for Change aims at serving the two-fold purpose of providing a platform for early-stage startups as well as getting the State government acquainted with the talent and solutions locally. The features of the program is as follows:

  • Showcase your ideas & work with Government of Rajasthan
  • Get direct work orders without following traditional tendering process
  • Apply for challenges & play a part in transforming Rajasthan
  • ‘Submit your idea’ to enhance citizen-centric services
  • Become torch bearer of change

 

Government of Madhya Pradesh has amended the MP Store Purchase Rules 2015 to give preference to Startups (at par with MSME). Following provisions have been included:

  • Unserved Items - This includes placement of supply order to the tune of 50% to first three MSME and Startup which fall within bracket of L1+15%, provided they match L1 rates.
  • Reserved Items - This includes placement of supply order to the tune of 50% to all MSME and Startup which fall within bracket of L1+15%, provided they match L1 rate

State Government of Andhra Pradesh has announced SUO MOTO scheme where any Startup or MSME or enthusiastic first generation technocrat or entrepreneur from Andhra Pradesh; with an annual turnover between INR 50 lakhs and INR 25 Crore; in identified sectors can submit a proposal after a call for proposal is announced. The companies outside Andhra Pradesh, can also apply under this scheme and will be evaluated by evaluation committee. If their product/solution is selected and they do not have a presence in A.P, they shall open a development center in Andhra Pradesh. Assistance under this scheme will be provided only on opening of such development center in A.P.

Implementation

  • Products and solutions, valued up to INR 50 Crore collectively, will be selected annually, by the Competent Authority, for implementation within GoAP
  • The amounts approved by the Committee may be released by the ITE&C Department directly to the concerned line Department
  • The line Department shall release funds to the proponent as per agreed milestones after satisfying themselves of the quality and quantity of work
  • If the product/solution recommended by the committee involves subsequent financial support in later stages or years, the concerned department has to provide for the same
  • The evaluation committee evaluates the proposal on the basis of usefulness, relevance to e-governance, uni que value proposition, cost effectiveness, sustainability and compliance to standards

Kerala government (Stores Purchase Department) has increased the cap on direct purchase of software products, services and mobile app from the ventures cleared by the Kerala Startup Mission (KSUM) from INR 5 Lakh to INR 20 lakh. The government order is subject to a condition that one purchasing officer cannot purchase more than two application in one year from one entrepreneur.

Further, he Kerala government granted sanction to its departments and autonomous institutions to invite startups registered under the Kerala Startup Mission (KSUM) in implementation of their IT projects that cost up to INR one crore. The departments, boards, local self-government institutions, corporations and universities can rope in start-ups through limited tender for design, development and implementation of their IT projects costing above INR 20 lakh and below INR one crore.

As per State Government, B2G (business to government) market in Kerala is high and the opportunity for start-ups in implementing their innovative projects in the government departments is a solid way of validating their products. Till December 2018, around 40 Startups were working with different Government departments. More details can be accessed at Kerala Startup Mission.

Grievance Redressal Mechanism in Public Procurement Issues

State Government has appointed Chhattisgarh State Industrial Development Corporation (CSIDC) as the nodal agency to regulate rules and regulation of procurement through a Government order (dated 28.4.2018).

Implementation process

  • Startups grievance to be uploaded on CSIDC website
  • Executive Director, CSIDC and other three members have been included in a cell to resolve issues
  • This cell to coordinate with relevant department involved in the concerned procurement
  • Complaint to be resolved in maximum 2 months and concerned Startup will also be informed

 

Government of Kerala has accorded sanction for direct purchase of Mobile Application by State Departments. Kerala Startup Mission also facilitates Government departments to fulfill their requirements by connecting with various startup registered in Kerala Ecosystem. In order to resolve any queries/ grievances from Startups, KSUM has developed an online portal where Startups can submit their Grievance with respect to any State Department. A dedicated officer has also been assigned to coordinate Startup procurement queries.