The forum, held in New Delhi recently, helped SMEs understand the procurement needs and procedures of the PSUs and provided new avenues of growth to them. IPF SME Forum promises to be a meeting platform for procuring companies and suppliers and help them prosper together as manufacturing activities gain momentum.

 

As India emerges as one of the fastest growing economies, contribution of small and medium-sized enterprises (SMEs) cannot be ignored. The SME sector employs about 106 million (40 per cent of India's workforce, next only to the agricultural sector) and manufactures more than 6000 products. The sector contributes currently around 6.11 per cent of the manufacturing GDP and 24.63 per cent of service sector GDP.

 

In order to give a boost to SMEs sector, in addition to various schemes, the Government has mandated Central PSUs to procure 20 per cent of their annual value of goods produced and services rendered from MSMEs. However, SMEs are still not able to tap the opportunities arising from this government mandate as they are either unaware of this procurement scheme or they are unable to 

fulfill the requirements mentioned in this scheme. 

 

Against this background, Industrial Products Finder (IPF) magazine organised IPF SME Forum at The Metropolitan Hotel (New Delhi) on July 28, 2018 to create awareness among SMEs about the government’s various schemes and provide exciting business opportunities for them. 

 

“With the government's proactive measures, the procurement from MSMEs by PSUs has been increasing steadily. IPF SME Forum aims to bridge the gap between SMEs and the procurement agencies and provide a platform to understand common areas of interest. Also, it is a good opportunity for participants to get more clarity on topics such as procedure for vendor registration, schemes for SMEs in PSUs procurement and how to avail those, do’s & don’ts while bidding for tenders, funding options for SMEs, etc,” said Pratap Padode, Editor-In-Chief, Industrial Product Finder (IPF).

 

IPF Forum was supported by NSE Emerge and Manufacturers Association for Information Technology (MAIT) - the apex body representing India's ICT sector.

 

In his keynote speech, Bhaskar Narang, Retired Principal Executive Director, Railway Board, said, “While public procurement are based on the priorities of the government, the procurement process is prescribed based on principles of fairness, equity, transparency, competitiveness and accountability. Being seen as job creators at low investment, SMEs are priority for the Government, which has initiated many schemes to give a boost to them. As per, Public Procurement Order, it is mandatory for PSUs to make 20 per cent purchase from micro & small enterprises (MSEs). It has also launched central public procurement portal with an objective to monitor the implementation of the public procurement from MSEs by Central public sector enterprises.”

 

On their part, many central PSUs have taken positive steps to enhance participation of MSMEs in their procurement programme. For example, under Government of India's Make in India policy, Northern Railway (NR) has launched an intensive drive to develop new vendors especially MSMEs to supply items needed for railway's requirement. “Starting July 2018, NR observes every Wednesday as Vendor Development Day where items required by Railways are exhibited at various NR depots along with detailed description & specification and other related information. MSMEs can avail this opportunity by visiting these depots,” 

 

informed Narang.

He advised MSMEs to focus on their strengths; look for right products & opportunities; use government support system optimally and do a clean, agile, smart & honest business. “It will carry you through in the long run with handsome gains,” Narang said.

In October 2017, the MSME Ministry launched a portal MSME Samadhaan with the objective of monitoring the procurement by CPSE and providing information about CPSE regarding delayed payment with them in respect of the MSME.

 

Chief Guest Vijay Kumar, Director, MSME Institute, MSME Ministry, Government of India, highlighted the problems faced by MSMEs and their solutions. He said, "In the last two years, micro & small units have flourished because of Public Procurement Order that ensures 20 per cent sourcing from MSEs mandatory for central PSUs. Besides, a sub-target of 4 per cent has been earmarked for procurement from MSEs owned by SC/ST entrepreneurs. Huge volume of market is available for micro & small enterprises as 

PSUs are seeking to increase sourcing from these units. 

 

In 2018-19, Rs 2 lakh crore of market will be available to MSEs."Vijay Kumar also focused on the importance of Zero Defect Zero Effect (ZED) program. ZED rating certification aims to drive manufacturing with adoption of 'zero defect' production processes without impacting the environment ('zero effect'). "By adopting ZED, MSMEs can reduce wastage and increase productivity. The ZED certified units get preference in purchase by Central and State PSUs. Besides, India's ZED certification is recognised in more than 100 countries," informed Kumar.

 

During the IPF SME Forum, procurement officers from PSUs spoke on their procurement plans and guided SMEs on how to prepare themselves to be on PSUs vendor list.

 

Parvinder Malik, Senior Engineer, Power Grid Corporation of India (PowerGrid) informed about the challenges involved in procurement from MSEs and initiatives taken by PowerGrid to facilitate procurement from MSEs. To facilitate procurement from MSEs, there are exemptions to MSEs for payment of documents fees and submission of bid security. Also, all procurements are done through e-procurement. In addition, PowerGrid has also been registered on Trade Receivables Discounting System (TReDS) platform to facilitate financing of trade receivables of MSMEs.

 

In 2017-18, goods and services worth Rs 547 crore were procured from MSEs (including MSEs owned by SC/ST entrepreneurs) by PowerGrid - accounting of 25.32 per cent of the PSU's total procurement. In the current financial year (till June 2018), it has sourced products & services worth Rs 352 crore from MSEs. In 2017-18, the company had also conducted four vendor development programs for MSEs. PowerGrid has appointed a nodal Officer for disbursement of cases registered at MSME-Samadhaan portal.

Trade Receivables Discounting System (TReDS) is a digital platform for MSMEs to auction their trade receivables at competitive rates through online bidding by financiers. In this process, a financier (mostly a bank) buys a bill (trade receivable) from a seller (an MSME) of goods before it’s due or before the buyer credits the value of the bill. In short, a seller gets credit against a bill which is due to him at a later date. The discount is the interest paid to the financier.

 

TReDS facilitates MSME payments based on buyers credit rating, said Akhilesh Kumar, BD Manager, North India, RXIL, India’s first TReDS platform established by SIDBI in partnership with NSE and three banks - SBI, ICICI Bank and YES Bank. According to Akhilesh Kumar, TReDS provides MSME vendors benefits such as alternate financing option, competitive price discovery, low turnaround time, low operational cost, lower financing cost, improved liquidity, etc.

 

The biggest challenge being faced by SMEs is access to capital, which is needed for expansion, acquisition, R&D, diversification, etc. As the sector is largely informal, banks have hesitated to lend to SMEs for their unreliability to repay loans. With the influx of NFBCs, fintech firms and other alternatives for finances, this problem today has more solutions than it ever did. Besides, separate SME bourses, which are based on SME friendly market architecture, offer a new avenue to raise fund. 

 

NSE Emerge is a new source for SME IPOs and provides a listing opportunity to the SMEs with minimum compliances and cost compared to the main board, said Rakesh Khurana, Sr Manager, Northern Region, NSE. In addition, NSE introduced the NIFTY SME Emerge index in November 2017 and constituents are weighted based on free float market capitalisation.

In a nutshell, IPF SME Forum enlightened the audience 

about new growth opportunities for MSMEs and helped them understand the procurement needs and procedures of the PSUs to expand their business further. 

 

 

Highlights of IPF SME Forum, New Delhi

? Topics discussed: Challenges and opportunities for MSMEs in PSUs procurement; How to be on PSUs vender list; Useful tips to emerge as preferred vendor for PSUs for procuring products & services; Funding options for MSMEs

? Speaker profiles: Procurement officers; PSUs Business Heads; Director of MSME Institute; Stock exchange officials

? Supporting Organisations: NSE Emerge and MAIT (Manufacturers Association for Information Technology)

 

Quote

 

With the government's proactive measures, the procurement from MSMEs by PSUs has been increasing steadily. IPF SME Forum aims to bridge the gap between SMEs and the procurement agencies and provide a platform to understand common areas of interest.

Pratap Padode, Editor-In-Chief, Industrial Product Finder (IPF)

 

 

In 2018-19, Rs 2 lakh crore of market will be available to MSEs. By adopting ZED (Zero Defect Zero Effect) program, MSMEs can reduce wastage and increase productivity. The ZED certified units get preference in purchase by Central and State PSUs. Besides, India's ZED certification is recognised in more than 100 countries.

Vijay Kumar, Director, MSME Institute, MSME Ministry, GoI

 

 

Being seen as job creators at low investment, SMEs are priority for the Government, which has initiated many schemes to give a boost to them. MSMEs should focus on their strengths; look for right products & opportunities; use government support system optimally and do a clean, agile, smart & honest business.

Bhaskar Narang, Retired Principal Executive Director, Railway Board

 

 

PowerGrid has taken many initiatives to facilitate procurement from MSEs. PowerGrid has also been registered on Trade Receivables Discounting System (TReDS) platform to facilitate financing of trade receivables of MSMEs. In 2017-18, goods and services worth Rs 547 crore were procured from MSEs.

Parvinder Malik, Senior Engineer, Power Grid Corporation of India

 

 

TReDS facilitates MSME payments based on buyers credit rating. TReDS provides MSME vendors benefits such as alternate financing option, competitive price discovery, low turnaround time, low operational cost, lower financing cost, improved liquidity, etc.

Akhilesh Kumar, BD Manager, North India, RXIL - India’s first TReDS platform

 

 

NSE Emerge is a new source for SME IPOs and provides a listing opportunity to the SMEs with minimum compliances and cost compared to the main board. In addition, NSE introduced the NIFTY SME Emerge index in November 2017 and constituents are weighted based on free float market capitalisation.

Rakesh Khurana, Sr Manager, Northern Region, NSE