GeM Finds Major Takers Amongst PSUs and States

There was the recent news of Steel Authority of India Limited (SAIL) becoming the first Central PSU to achieve the major milestone of procurement value of Rs 10,000 crore through the Government-e-Marketplace (GeM) since inception. While this is definitely a feather in SAIL’s cap, it also shows the stellar role that PSUs are starting to play in the development and further nourishing of GeM.

SAIL, BHEL, GAIL Biggest Takers

In fact as per government data, it has been the PSUs who have been one of the biggest contributors to the GeM procurement juggernaut apart from the Ministries of Defence and Railways. Minister of State for Commerce and Industry Anupriya Patel informs that GeM has achieved total procurement value of Rs 2,70,384 crore as on 25 July 2022. Out of this approximately 40% of the total procurement order happened from the PSUs. In fact, procurement by central public sector enterprises alone jumped many folds to about Rs 43,000 crore in FY22.

Previously, public procurement in PSUs was characterized by inefficient, opaque and time consuming manual processes conducted offline, complicated by a fragmented and complex policy landscape. The portal is an end to end online and integrated system and it brings efficiencies in public procurement for PSUs by removing manual interventions at various stages of transactions.

Buoyed by this success, it is no wonder that Prashant Kumar Singh, CEO, GeM now plans to launch fresh initiatives to woo states and PSUs under them to double purchase of goods and services through GeM to breach the Rs 60,000 crore mark in FY23. State governments and their PSUs purchased goods and services through GeM in FY22, having accounted for nearly a third of the total procurement of more than Rs 1 trillion on the portal.

“While the procurement by states and their PSUs hit a record high in FY22, there is still a huge scope for them to go further. Central government departments and central PSUs are already procuring through GeM in a big way,” Singh reiterated.

From a small beginning of Rs. 2.7 Crore in FY’18-19, SAIL has already crossed the total value of Rs. 10,000 Crore in this year. Incidentally, SAIL was the largest PSU procurer on GeM in the previous fiscal too with a value of Rs. 4,614 Crore. has crossed the Rs 1,500-crore mark in the first half of this fiscal. BHEL too has crossed the Rs 1500 crore mark in the first half of this fiscal through the GeM portal. Some of BHEL’s major procurement through the GeM portal includes steel, cement, cables, various sub-assemblies, among others.

In the previous fiscal, it was GAIL who made the next highest procurement of Rs 1,033 crore among Central PSUs through the GeM portal in the previous fiscal. This year, GAIL has made procurement of Rs 526 crore through the GeM portal till July 2021. GeM accepting GAIL’s suggestion to facilitate the procurement of critical items like line pipes through its portal for the first time has been largely responsible for this.

Many of the PSUs are not only procuring goods and services through GeM, but are also registering themselves as ‘Seller’s for various products on the platform and are receiving orders from the same. Deputy CEO GeM A V Muraleedharan believes the heterogeneous nature of public procurement portal’s seller base reflects on the founding pillar of inclusivity. Accordingly PSUs are able to enter business tie ups with all stakeholders starting from big companies and conglomerates. The seller base includes self help groups and MSME sellers from all over the country.

GeM Looking to Woo States

Justifying Singh’s move to woo both PSUs and states to further scale up procurement through GeM, states too are becoming another important contributor to the GeM kitty. Currently, while all states are tapping the GeM portal, their levels of purchases vary sharply. Uttar Pradesh led the pack of states, with purchases of Rs 11,275 crore in FY22, or more than a third of the total procurement by all states and related entities. This was followed by Gujarat (procurement of Rs 3,487 crore), Maharashtra (Rs 2,259 crore), Madhya Pradesh (Rs 1,968 crore), Bihar (Rs 1,494 crore) and Odisha (Rs 1,455 crore).

Few states are not buying much because procurement by states through the GeM portal is voluntary, while it has been made mandatory for central government ministries/departments and PSUs under them. To attract states who have still not embraced GeM fully, the portal is integrating with Panchayati Raj Institutions to allow online buying and selling by the Panchayats at the grassroot level. GeM is also in an advanced stage of integration with IndiaPost for extending logistics services at the grassroot level. GeM SAHAY is another initiative of GeM to facilitate small sellers to avail credit financing from various integrated lenders against the orders received on GeM.

Commerce and Industry Minister Piyush Goyal feels there is a need to keep a strict vigil on GeM procurement data and identify any deviant behaviours using Advanced Analytics and AI/ML based tools so that immediate and strict action could be taken against any such deviant behaviours. He further hoped that the kind of data being generated in GeM will certainly help government in improving transparency and efficiency in public procurement. The aggregation of demand because of procurement happening through a single portal will help in reducing the cost of procurement also for both PSU and state buyers. With collective wisdom and collective efforts of all stakeholders, GeM can well become the largest marketplace for public procurement in the world