Demerged CPSEs may use a parent's name in public procurement for 5 yrs

The government has granted demerged entities of central public sector enterprises (CPSEs) the authorisation to use the parent company's name for a period of at least five years from the demerger date, according to a report by The Economic Times (ET). This decision aims to facilitate the participation of demerged companies in public procurement contracts, addressing challenges that have prevented them from qualifying in certain cases.

The government, through an internal circular to ministries and departments, has communicated permission for demerged entities to use the name of the parent company in public procurement processes. The move intends to enhance the eligibility of demerged entities in public procurement, as many faced difficulties qualifying for such contracts after the demerger.

Procuring entities are advised to consider the credentials of demerged entities based on merit and specific circumstances. The circular emphasises factors such as the type of procurement, the nature of the demerger, and the availability of eligible bidders.

Moreover, the bid documents must transparently specify the conditions under which demerged entities may become eligible for public procurement contracts. Central ministries or enterprises are also mandated to procure a minimum of 25 per cent of their total annual procurement from micro and small enterprises (MSEs).

As earlier reported by Business Standard, the procurement of goods and services by CPSEs through Government e-Marketplace (GeM) grew 74 per cent to Rs 42,510 crore during the first four months of the financial year 2023-24 over the corresponding period in the previous year. The finance ministry has told CPSEs to ensure 100 per cent procurement through the government portal.

Procurement through this portal increased from Rs 7,027 crore in 2020-21 to Rs 45,928 crore in 2021-22. It further went up to about Rs 1.06 trillion during 2022-23.

National Thermal Power Corporation, Steel Authority of India, Indian Oil Corporation, Bharat Heavy Electricals, and Oil and Natural Gas Corporation are some of the CPSEs that are leading the procurement drive.