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The closure of the DGS&D, which traces its origin to London during the British raj, follows setting up of the government e-market (GeM) platform last year for public procurement of goods and services.
"We closed all the operations of the directorate on October 31. It was replaced with a much transparent GeM platform," the ministry official said.
About 1,100 of its employees are being shifted to different departments, including income tax, while the senior officers are likely to be accommodated in other branches of the government.
DGS&D assets, which were present across the country, are transfered to the Land and Development Office of the urban development ministry.
The directorate has four regional offices, including Mumbai, Kolkata and Chennai. It has 12 Purchase Directorates (Commodity-wise) at its headquarters here. Besides, there are 20 offices/sub-centres and the staff strength is over 1,200.
The DGS&D has its origins in the India Stores Department, which was established in 1860 in London by the British for centralised purchase of goods for India.
The GeM portal has eliminated human interface in vendor registration, order placement and payment processing to a great extent.
The central and state governments procure goods and services worth over Rs 5 lakh crore annually.