Public Procurement Through GeM

Government e-Marketplace (GeM) is an end-to-end procurement system providing the tools for e-Bidding, Reverse e-Auction and demand aggregation to facilitate the government end-users to achieve the best value for their money. A classic initiative by the Government to promote 'Maximum Governance Minimum Government', 'Make in India' and 'Digital India'.

Government e-Marketplace (GeM) is a national public portal to make the procurement simpler. GeM is aimed at changing the outdated procurement methods of Government and source right products/services at right price, at right time, from right source of right quality and in right quantity. The GeM portal is currently being used by almost all departments/organizations of Central Government, 23 States & Union Territories. The Government of India has made GeM mandatory for products and services available on it to all the Central Government Ministries, Departments and Central Government Organizations. The purchases through GeM by Government users have been authorized and made mandatory by Ministry of Finance by adding a new Rule No. 149 in the General Financial Rules, 2017.

GeM Procurement Guidelines

The Government e Marketplace (GeM) platform was launched on 9th August, 2016 as an online, end to end solution for procurement of commonly used goods and services for all Central Government and State Government Ministries, Departments, Public Sector Units (PSUs) and affiliated bodies. Public procurement in India is currently guided by multiple well-founded procurement guidelines and policies. Since these policies were drafted in a time before GeM, they were primarily designed in accordance with the offline procurement process and not with an online marketplace in mind. Thus, certain operational design elements of these policies may not be entirely relevant on a standardized technology-driven platform like GeM. With the advent of GeM, it is critical for the essence of these policies to be maintained and brought together in a comprehensive marketplace procurement process that shall apply to all procurement on GeM. The GeM procurement process is built on fundamental principles of public procurement i.e. transparency, value for money and openness of competition. For procurement made on GeM, buyers shall abide by the GeM procurement guidelines and shall not be subject to compliance issues arising from different policies that may be applicable to them when they procure offline/outside GeM.

Potential for the GeM Platform

At present, it has 2.5 lakh registered vendors and about 37,143 buyer organizations, including Government departments. About 200-plus Public Sector Units (PSUs) and 30-odd States and Union Territories have been brought on board. It offers 10 lakh-plus products and over 13,000 services. Refer below given figure for details.

Since 2016, it has managed to do transactions worth Rs 28,206 Crores. It is targeting to take the cumulative total to Rs 1 Lakh Crores in 2019-20.The Government aims to increase the order value of the Government e-Marketplace (GeM) to Rs 2-2.5 Lakh Crores in the next three years. Taking into consideration that the total addressable market which is pegged at 3.5 Lakh Crores, there seems to remain a deficit of 2.5 Crores after 2019. Refer below given Figures.

The value of annual spend on public procurement in India is estimated at anywhere between 18 – 20% of India’s GDP. This spend constitutes the entire universe of goods and services procured. Approximately 20% of total goods (~2 L Cr) and 7.5% of total services (~1.5 L Cr) can be classified as goods and services addressable in the short term for the GeM platform.

Since the procurement landscape in India is considerably diverse in terms of geographic and policy-related considerations, higher penetration shall be targeted for buyers covered under Central Government (such as Central Ministries, Departments, Central Public Sector Enterprises, and Public Sector Undertakings) which account for ~65% of total addressable spend.

Over a 10 year period, the GeM platform shall be able to target 2-3 Lakh Crores of annual transaction value and in the long-run (10-12 years) it could potentially capture as much as 5 percent of India’s nominal GDP in terms of transaction value. The aspiration is in line with benchmarks of global best-in-class e-procurement portals (such as ChileCompra, GeBIZ and KONEPS) which capture anywhere between 4.5 percent – 6 percent of their respective countries’ GDP through online transactions supported by their respective platforms.

Government e Marketplace (GeM), the national public procurement portal offering end to end solution for all procurement needs of Central and State govt. departments and PSUs has closed the FY 2018-19 on a high note. The year witnessed a four-fold increase in total value of transactions on the portal and doubling of number of sellers in the marketplace. There has also been an overall growth in other dimensions like number of categories, products and buyers. Despite such phenomenal growth in transactions, average rejection rate of supplies remained below one percent, which is proof of high quality of products/services offered on the portal.

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