From Rs 422 cr to Rs 5.43-lakh cr: A Government ‘startup experiment' is redefining public procurement

Time of India

2 days ago

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The Government e-Marketplace, the platform for India's small and medium enterprises to sell to the government, has seen tremendous growth in terms of GMV (Gross Merchandise Value), number of sellers as well as leveraging technology to optimise the public procurement ecosystem. In an interaction with ET Digital, Ajit B Chavan , Additional CEO and Chief Seller Officer at GeM talks about how the organisation aims to onboard more Micro and Small Enterprises (MSEs) through partnerships and programs and its entrance into the state and regional governments.Edited excerpts:GeM is a startup experiment of the government of India. Our GMV in 2016 was Rs 422 crores in 2016, we have reached Rs 5.43 lakh crores in the last financial year and it is ever growing. So in terms of GMV, it has really multiplied more than 1000 times. We have also reached about a good amount of inroads into three tiers of governments, that is the central government and its organisations, as well as the state governments and the local administration.Well, we are very conscious about the fact that there is a huge number of MSEs available in the market who might be wanting to do business with GeM, and we are not satisfied with the numbers that we have. So yes, we are trying to take proactive steps towards onboarding them in terms of aligning with various MSME and MSE organisations and associations. So they are our MoU (Memorandum of Understanding) partners, and we are having regular meetings and workshops with them to ensure that more and more MSEs come. We also have a very good working relationship and collaborations with the Ministry of MSME, where we do combined programs to ensure that you know not only MSEs, but women-led MSEs, SC/ST-led MSEs, startups, divyang and other weavers, artisans, all of them, as part of our inclusion mandate, are on board with the platform.The GeM Sahay app has been a transformative intervention at GeM. We had done a pilot, and we now rolled out the India skill program. Its official launch is also awaited. The idea is small ticket loans, collateral free for the proprietors currently. Later on, the length and breadth of the program will involve all the sellers of the platform. The endeavour is to give a collateral free short ticket and short duration loan of up to Rs 10 lakh within 10 minutes time, preferably at very competitive rates. So the impact would actually be very far reaching when the India skill program is launched in terms of empowering the small MSEs to participate in more and more bids onto the platform.We are in the process of onboarding as many lending partners as possible. It works on the highest level of FinTech architecture. There is also a specific focus on the banking partners, so that the cost of lending comes down and more beneficiaries are being on board. So once you have beneficiaries who are willing to take up this program, and when there are lenders who are willing to lend onto the platform, it's one step closer to the empowerment of micro and small enterprises.It is basic economics, it is about the seller base. The larger the seller base, the more the supply, the more competitive is the pricing. So there are studies which say every additional seller in a bit reduces the price by 0.5%. So that is point number one. Then there is a healthy mix of technology tools- Lot of business analytics, AI/ML (Artificial Intelligence/Machine Learning) use cases have been deployed to ensure that price discovery is optimum. It is a democratic place. So more and more sellers from across the country are able to participate. And by virtue of that, and by virtue also of technology, in terms of breaking the buyer-seller collision, we are able to provide a very good pricing to our customers, that are our buyers. And very conservative, documented estimates say that at least 10% savings has been accrued to our buyers. So if we are talking about a cumulative GMV of Rs 14 lakh crores, you can just imagine the kind of impact in terms of cost efficiencies that this platform has been able to bring in.So whatever is required for the buyers to make a very informed decision, be it in terms of what has been the price at which the product or a similar product that has been transacted on the platform? or what is the price at which, in certain cases, the price at which this similar product is available outside of the marketplace? That information has been made available using advanced analytics. It's a continuous, ongoing work. We have come out with a very interactive chat bot, where a lot of queries, a lot of resolutions would be done by the chat bot. So this chat bot is available in about 12 Indian languages and the idea is basically to empower the chat bot to make it so good and user-friendly to enable more interfacing. Be it buyer or seller, just make best use of technology for their day-to-day operations.Well, if you are referring to the Land Border Sharing Declaration, which came into being in 2020, then yes, it has, it has definitely helped in terms of propelling the Make in India, philosophy of the government. In terms of sellers, it does mean that seller has to go through a certain amount of scrutiny to ensure that they are in compliance with the land border sharing, in terms of, control of ownership, where the established sellers are incorporated, and we make sure that we have mechanism on the platform where we ensure that this important policy is implemented properly.Well, we are moving towards a unified public procurement, largest unified public procurement, end-to-end platform. Towards that, we are required to integrate with a huge number of databases, huge number of buyer ERPs (Enterprise Resource Planning). Currently, if I am not mistaken, we have almost 75 integrations to create innovation, be it integrations with the Aadhaar database, PAN database, or MCA database or BIS database, or even ERPs of certain important Public Sector Undertakings (PSUs). So this is an ongoing work.Of course, this is an ongoing business. This is an ongoing pitch, also for the government of India and its organisations. It's not mandatory yet but we have a pitch made to all the states. All the states have signed up MOUs with us. We have also added cooperatives as a buyer. We are continuously in touch with our buyers. We have nominated senior level officers who will go into the states, and this year, we'll probably have a much more extensive outreach with our stakeholders, especially other than the central government organisations.On a very basic level, if you just imagine the amount of paper we have saved through our online procurement system and the amount of carbon footprint it would have generated otherwise. We processed about 72 lakh orders last year. A good number of them are bids. And it has been happening for eight years. We take our responsibility towards sustainability very seriously. We are in touch with the MOEF (Ministry of Environment, Forest and Climate Change) as other standard making bodies so that we can introduce more and more sustainable products.This year our focus would be more on the state outreach. So states are going to be a very important integral part of our GMV growth business. Of course, CPSE (Central Public Centre Enterprises) and the central government account for almost a majority of our GMV. So then the next step is the local self governments. Then we are also trying to get more and more cooperative buyers. Apart from that, we are trying to see if we can give more modalities of purchase and then add rate contract. So probably three, five years down the line, we would emerge as the world's largest public procurement platform.On World MSME Day , on June 27, 2025, ET Digital will also open registrations for its sixth edition of the ET MSME Awards 2025. The coveted award programme celebrates India's top MSMEs for their achievements and contribution to the nation's economic development.