Rs 50k cr worth annual procurement from MSMEs on anvil post GeM’s integration with Railways

The public procurement portal Government eMarketplace (GeM), which is currently underway integrating all procurement made by Indian Railways onto its platform, may see around Rs 50,000 crore of annual procurement by latter done online, according to Commerce and Industry Minister Piyush Goyal. In a performance review meeting of GeM with officers of the procurement marketplace and Department of Commerce on Tuesday, Goyal informed that the pilot bidding by Railways’ buyers through GeM is likely to begin by August end and that the integration will “usher in a lot of savings for the public exchequer.” Goyal added that it would also lead to “big-ticket procurements by the Petroleum and Steel sectors also.”

“This will definitely benefit MSMEs. There are around 250 components required to make a car, apart from its engine, that are procured by carmakers from automotive MSMEs. So, selling to Railways is bound to benefit MSMEs not just in supplying various train manufacturing equipment but also to its PSUs, etc. With its integration into GeM, Railways will also save significantly. Moreover, the number of MSMEs otherwise serving Railways offline will also be getting onboard the GeM portal post integration. Hence, the number of GeM sellers will be increased,” Sanjiv Layek, Executive Secretary, World Association for Small and Medium Enterprises (WASME).

Indian Railways currently spend around Rs 70,000 crore annually on procurement of over 98 per cent of goods for its operations, or its public sector units or production units, Goyal had said at the National Public Procurement Conclave by GeM and CII in August last year. Moving this Rs 70,000 crore procurement to GeM will help Railways save at least 10-15 per cent which could be almost Rs 10,000 crore. The GeM portal currently has nearly 19 lakh sellers, of which close to 7 lakh are micro and small sellers with a 56.12 per cent share in order value, as of June 1, 2021, according to the data from the portal. So far, 67.21 lakh orders have been placed on the portal with a transaction value of Rs 1.11 lakh crore.

The GeM marketplace has grown 5x so far in seller count from 3.76 lakh sellers listed as of May 2020 including the number of MSE sellers which have grown from around 1 lakh from May last year. The marketplace had added 40,212 new sellers on an average per month in 2020 with 486 new product categories per month, as per the data shared by the portal on Twitter. GeM was launched by the Modi government on August 9, 2016, to boost efficiency and transparency in the public procurement process and for small businesses to leverage digital selling of goods and services.