Public sector companies and states agencies may soon be legally bound to give preference to small and medium enterprises (SMEs) in bidding process. While 15% price preference is given to SMEs under National Small Industries Corporation (NSIC) scheme, some PSEs and states are not extending the same to them. “The government proposes to include the scheme in the Micro, Small and Medium Enterprises (MSME) Development Act, 2006 by issuing a gazette notification,” an MSME ministry official said.

The move follows several complaints received by the government. “We have received a number of complaints about the non-compliance to the NSIC scheme by many of the PSEs and the state governments. To ensure that the provisions are extended by all the departments, the provisions are required to be made mandatory with legal status and the government is taking the matter seriously,” the official added.

The government has already prepared the draft policy for procurement preference to be included in the MSME Development Act. However, it does not have legal sanctity as gazette notification has not been issued.

The SME ministry has also proposed that NSIC should be treated as a manufacturer because in many cases it submits the bids on behalf of the MSMEs that manufacture the products. “In some of the tenders floated by government departments or public sector utilities, we have found that NSIC is not considered as a manufacturer and its bid on behalf of the companies is set aside on this ground. We need to rectify this,” the official said.

The single-point registration scheme of NSIC under government stores purchase programme provides for special provisions with regard to the MSME sector. The provisions include issue of tenders free of cost, exemption from payment of earnest money deposit, waiver of security deposit up to a certain limit and price preference of 15% over the quotations of the large scale industries.

The preferences are available for the MSMEs desirous of participating in government purchases and also to such companies that are capable of manufacturing stores where manufacturing activities are required.