Integration of GeM with Railway E-Procurement System to Benefit MSMEs

On Tuesday, Shri. Piyush Goyal, Minister of Railways and Commerce and Industry, called upon to expand the Government e-Marketplace (GeM) scope. He asked to include more participants in the GeM portal for public procurement of services and products. The GeM is an entirely cashless, paperless and system-driven e-marketplace enabling procurement of ordinary use services and goods with minimal human interface.

Shri. Piyush Goyal also said that the GeM should evolve as a one-stop-shop for all State and Central Government requirements and PSUs (Public Sector Undertaking). The GeM should evolve to provide opportunities to the MSMEs in such a way that they can showcase their products. 

Shri. Piyush Goyal stressed integrating the GeM with the railway e-procurement system expeditiously. By integrating the GeM with the railway e-procurement system, there will be an annual procurement of about Rs.50,000 crore worth from MSMEs. It will usher in significant savings for the public exchequer and pave the way for massive procurements by the steel and petroleum sector. There is an expectation of beginning the pilot bidding by the railways’ buyers through the GeM by August end.

The GeM initially started as the national procurement portal exclusively for goods and services. However, as per the vision of the Budget Speech of FY 2020-21, it is becoming a ‘Unified Procurement System’ for goods, services and works contracts. There is s fast growth in the impact and scale of the GeM. 

In FY 2020-21, the order value of the GeM reached Rs.38,620 crore. There is a registration of over 52,000 buyers and over 18.75 lakh sellers dealing in 187 service catalogues and 16,332 product catalogues on the GeM portal. Out of the 18.75 lakh sellers on the GeM portal, around 7 lakh are micro and small sellers having a 56.12% share in the order value.

Currently, the Indian Railways spend about Rs.70,000 crore annually on the procurement of around 98% of goods for its operations or production units or public sector units. Shifting the procurement worth Rs.70,000 crore to the GeM will help the railways save at least 10-15% resulting in almost Rs.10,000 crore.

The GeM has also taken various COVID-19 related measures and initiatives. There is a prioritisation of the product or brand approval for the categories. The order value in the COVID-19 categories on the GeM portal has been Rs.7,863 crore from March 20 to May 21, including Rs.268 crore worth of oxygen concentrators. An extension of the delivery period beyond the expiry of the original delivery period by 30 days is enabled. There is a reduction in the bid duration from 10 to 1 day and the delivery period from 15 to 2 days.

The integration of the GeM portal with the railway e-procurement system will surely benefit the MSMEs. The carmakers require around 250 components to make a car, apart from the train’s engine, that they procure from the MSMEs. Thus, selling to railways will naturally benefit the MSMEs by supplying several train manufacturing equipment to the railways and their PSUs. The GeM sellers will also increase as the MSMEs serving the railways offline will also onboard the GeM portal.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in