Uttar Pradesh mandates 25% procurement from MSMEs by govt depts and PSUs

Fixes procurement sub-quota for MSMEs owned by women

To promote the micro, small and medium enterprises (MSME) sector, Uttar Pradesh has mandated 25 per cent procurement by the state government departments and public sector undertakings (PSU) from the state MSMEs.

Besides, the state government has fixed sub-quota of 3 per cent and 4 per cent for compulsory procurement from the MSME units owned by women and scheduled caste/scheduled tribe (SC/ST) entrepreneurs respectively.

Under the new UP micro and small enterprises procurement policy 2020, which was approved by the state cabinet meeting chaired by chief minister Yogi Adityanath here on Friday evening, the government has also mandated 5 per cent procurement from ‘green enterprises’, which are operated on eco-friendly standards and do not harm environment.

Through a notification issued on November 9, 2018, the central government had augmented the mandatory procurement from the MSMEs from 20 per cent to 25 per cent. Taking the cue, the Adityanath government had also decided to espouse the central guidelines to boost the state MSME sector, which contributes 60 per cent of the state’s annual industrial output and is the second largest source of employment after agriculture.

At present, UP is home to nearly 9 million MSMEs. The new procurement policy is expected to provide a major boost to the sector, which has been weathering tough competition and general economic slowdown in the recent times. The new policy has replaced the erstwhile UP MSME procurement policy 2014.

According to a former UP chief secretary, the state government procurement totals more than 20% of its annual budget. Since, the UP Annual Budget 2020-21 is to the tune of more than Rs 5 trillion, the procurement by the various departments and state corporations would be worth at least Rs 1 trillion, with the proposed quota of 25 per cent for the local MSMEs translating into direct purchase of about Rs 25,000 crore.

At numerous occasions, Adityanath has termed the MSME sector as the backbone of the state’s industrial growth, and said the government could act as a catalyst by promoting the MSME clusters.

He said the sector offered unlimited opportunities for creating maximum employment opportunities with minimum capital investment and land requirements, since a majority of these units were operated out of the premises of the entrepreneurs.

In 2018, the state had launched its flagship one district, once product (ODOP) scheme to boost the MSME sector by promoting the traditional and indigenous industries of the state.

In 2018-19, the state had attained industrial exports worth Rs 1.14 trillion compared to Rs 89,000 crore in 2017-18, thus growing by nearly 28 per cent. More than 80 per cent of these exports had emerged from the MSME sector. To further promote exports, the government now plans to establish export hubs in each of the 75 districts in UP.