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Relaxed Norms Of Public Procurement For Startups

Whenever a tender is floated by a Government entity or by a PSU, very often the eligibility condition specifies either prior experience or prior turnover. Such a stipulation prohibits/ impedes Startups from participating in such tenders. So, the department of expenditure has issued a directive to all ministries that all startup may now be allowed relaxation from certain eligibility criteria in the tendering process.

Under the public procurement policy, the central government department and ministries and its central PSUs have to procure at least 20% of their purchases from micro and small enterprises beginning April 1, 2015.

In order to promote Startups, Government of India has exempted Startups from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters. The Startups will also have to demonstrate requisite capability to execute the project as per the requirements and should have their own manufacturing facility in India.

As per the order, start-ups eligible should have the technical capability to deliver the goods and services as per prescribed technical and quality specifications, and may not be able to meet the qualification criterion relating to prior experience-prior turnover.

The move will provide a level playing field to startups in the manufacturing sector vis-a-vis the established companies and enable startups to participate in such tenders with relaxed eligibility conditions.

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