Purchase policy for SMEs may face rough weather
Government’s proposal to make it mandatory for PSUs to buy 20 per cent of their requirements from the small firms may run into difficulties as the policy can be enforced only if the SME prices are competitive, industry chambers say.
“Practically, it is not easy to implement and monitor this policy,” a CII official said.
The policy is expected to witness a lot of debate. “In the long-term, if free market forces do not exist then implementation would be difficult. The SMEs should get orders on merit,” she added.
The Ministry of Micro, Small and Medium Enterprises (MSME) has come out with a draft policy which will enforce 20 per cent purchases by all PSUs and central government departments from the SMEs. It will have a legislative backing under Section 11 of the MSME Development Act, 2006.
Within the 20 per cent preference, the draft suggests 22.5 per cent reservation for the units owned or managed by the SC/STs and 10 per cent by women entrepreneurs.
The CII official said the policy should not “enter the commercial space of the PSUs.” Moreover, if Chinese imports costs less, why would the government firms not buy from them.
A FICCI official also wondered why the PSUs should buy goods from the SMEs if the prices are not competitive. “It is not only policing. The government should also have a hang of what is happening at the ground level,” he said.
While a monitoring cell would be set up in the ministry, its implementation would be difficult. “There are many escape routes today,” the CII official said.
The National Board of MSME which has cleared the draft policy has asked for more input from the stakeholders, including the PSUs, industry chambers, trade unions and representatives of the small firms.
Source: The Economic Times
