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Details of the small scale industries participatedIn vendor development programme
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Faq on public procurement policy 2012
Sustainability in chemical industry
FAQ onPublic Procurement Policy 2012
The Micro, Small and Medium Enterprises (MSMEs) in India produce a diverse spectrum of products ranging from simple products produced by household enterprises and highly advanced ones used by sophisticated industries. In the present globalization era and changes in communication technologies, new challenges and opportunities have arisen for MSMEs. Micro and Small Scale Enterprises (MSEs) are highly susceptible to volatile market conditions when compare to Medium Scale Enterprises. Govt. of India is providing support in marketing of MSE products through a variety of measures such as price preference, reservation of products for exclusive purchase from MSEs, issue of tender sets free of cost, exemption from payment of earnest money etc. In practice most of these facilities are not provided to the MSEs by Govt. Departments/CPSUs etc. To address this inherent problem, Govt of India has put in place Public Procurement Policies to support MSEs and ensure a fair share of market to such entities.
This policy will help to promote MSEs by improving their market access and
competitiveness through increased participation by MSEs in Govt. purchases and
encouraging linkage between MSEs and large enterprises. Central government has
notified a new Public Procurement Policy (PPP) during Jan 2012 to ensure the MSEs
contribution in the supply of services & products to buyers (Central Govt ministries/
Departments/ PSUs). This policy is applicable with effective from 01.04.2012.
The Policy mandates that 20% of procurement of annual requirement of goods and services by all Central Ministries / Public Sector Undertakings will be from the micro and small enterprises. Government has also earmarked a sub target of 4% procurement of goods & services, out of the 20%, from MSEs owned by SC/ST Entrepreneurs. The policy has a time frame of three years beginning 2012-13 for implementation after which it will become mandatory. (The policy is at: www.dcmsme.gov.in/pppm.htm).
The following frequently asked questions will provide a clear picture about the
policy and its implementation.
Who are coming under preview of PPP?
Every Central Government Ministry or Department or Public Sector Undertaking or
organisation is coming under the review of the PPP.
Who are beneficiaries as per PPP? The Public Procurement Policy shall apply to Micro and Small Enterprises registered with District Industries Centre (DIC) or Khadl and Village Industries Commission (KVIC) or Khadl and Village Industries Board(KVIB) or Coir Board or National Small Industries Corporation (NSIC) or Directorate of handicraft and Handloom or any other body specified by Ministry of MSME, Govt of India.
How can be classified Industries in to Micro, Small and Medium Enterprises? Micro, Small and Medium Enterprises have been classified based on their investment in plant and machinery or on equipment as per MSME D Act.2006. The present ceiling of investment to be classified as micro, small or medium enterprises is as under:
Classification of industry
Investment limits on plant and Machinery for
manufacturing sector (Rs)
Investment limit on equipment for
Service sector (Rs)
Micro Upto 25 Lakhs U p t o 1 0 L a k h s
Small 25 to 500 lakhs 10 t o 200 l akhs
Medium 500 to 1000lakhs 200 to 500 lakhs
It can be learned from the above that classification has been made based on investment in Plant and machinery but not based on the turnover of the enterprises.
Is there any document or certificate through which an enterprise falling under
any one of the classification of MSME can be identified?
The information like Classification (Micro/ Small/Medium), Sector (Manufacturing/
Service), line of activity, Name & address of the enterprises is mentioned in the
Acknowledge of Entrepreneur Memorandum Part II (EM Part II) duly counter signed
& Sealed by the District Industries Centre, Govt of Kerala. EM part II is applicable for
the enterprises who are existing and manufacturing the products / rendering the
services as per the provisions of MSME D Act 2006. Prior to implementation of MSME D
act 2006, the same was called as permanent SSI registration.
EM part I acknowledgement is issued to the enterprises who are going to start (not yet
started production /services) i.e provisional in nature. This is issued for the purpose of
obtaining Electricity connection and applicable various licenses before starting the
production. After establishing the enterprises, EM part I holders have to apply for the EM
part II. Therefore EM part I acknowledgment holders are not eligible for availing the
provisions of the PPP till they get EM part II acknowledgement.
What is the difference between NISC Registration certificate and EM part II
EM part II is issued by District Industries center, Govt of Kerala.
NSIC Single Point registration Certificate is issued to MSEs by National Small Scale
Corporation, Ernakulam. NSIC certificate is issued only to Micro and Small Scale
Enterprises (MSEs) but not to Medium scale enterprises. MSEs who got EM part II
acknowledgment, are only eligible for applying for certificate.
Which registration holder is eligible for availing the benefits of the PPP?
MSEs holding EM part II acknowledgement are eligible for the benefits of the PPP. NSIC
registered units obviously hold the EM part II acknowledgment, because NSIC
registration is done only for MSEs. Hence both registrations holders are eligible for
availing the benefits.
Can we negotiate other than L1, since presently it is not allowed?
It is mentioned in the policy that the participating MSEs in a tender quoting price within the band of L1+ 15% may also be allowed to supply a portion of requirement
by bringing down their price to the L1 price, in a situation where L1 price is from
someone other than an MSE. Such MSEs, whose quite is within L1+15%, may be
allowed to supply up to 20 % of the total tendered value. In case of more than one such
MSE, the supply will be shared equally.
How do we identify MSEs who are presently vendors to our organisation?
Request your all vendors to submit a copy of EM part II acknowledgment (permanent
SSI registration) issued by District Industries center of respective district where
company is located (it can be anywhere in India). MSEs Classification will be clearly
mentioned in EM part II. Also request your vendor to provide information on the
community they belong to (SC/ST) as per the provisions of the PPP.
How to monitor the total % of value of the orders placed on MSEs?
Suitable modify your ERP by mentioning two more attributes like classification of the
Enterprise (Micro / Small), Community they belong to (SC/ST) if not already modified.
What are the benefits with NSIC Registration carries for MSEs?
As per the govt purchase & Price Preference Policy for Micro and Small Enterprises to
market their products, the following benefits are extended to NSIC registered
Issue of tender sets /documents free of cost
Exemption from payment of earnest money
Waiver of security deposit up to the monetary limit for which the unit is
Price preference upto 15% over the quotation of large scale units.
How do existing vendors apply for EM part II and NSIC registration?
Procedure for applying both registrations is simple. Vendor has to approach the offices
mentioned bellow and fill necessary application and submit. Entrepreneur does not
need to pay any registration charges for applying for EM part II where as he / she has to
pay processing /registration fee for NSIC registration. EM part II can also be filed
t h r o u g h o n l i n e a n d g e t a c k n o w l e d g e m e n t t h o r o u g h l i n k :
(www.dic.kerala.gov.in/web/ssipmt.php). However the acknowledgment has to be get
counter signed by GM DIC.
1)Office of the General Manager, District Industries Center, respective district HQ, can
also be approached to register as MSME unit and to get EM part II acknowledgement.
2)Sr Branch Manager, NSIC Limited, Branch Office, S 67 GDCA Complex 1 st floor,
Marine Drive, Ernakulam, Kochi, Cochin 682031, Tel: 0484-2381850/2368149, Fax:
0484-2380155, Email: email@example.com -can be approached for NSIC Single Point
What is the mandatory target for the buyers as PPP?
Every central Ministry/ Department/ PSU shall achieve an overall procurement of
Minimum 20 % of total annual purchase of the products/ services produced or rendered
by MSEs. It is mandatory for the organisation to place purchase orders worth of 20 % of st
their annual procurement value to MSEs from 1 April 2015.
stIs the policy is applicable from 1 April 2015, since it is mandatory from that date?stThe policy is applicable form 1 April 2012 (ie from current financial year). Every central
Ministry/ Department/ PSU shall set an ann