GeM and MSMEs: Catalysing India's Growth Engine through Digital Public Procurement
Micro, Small and Medium Enterprises (MSMEs) remain central to India's economic and social progress. Together they contribute close to 30% of GDP, account for over 45% of exports, and provide livelihoods to more than 110 million people, making them the backbone of the country's manufacturing, services and trade ecosystem. Beyond economic output, MSMEs foster entrepreneurship, support regional growth, uplift women and disadvantaged communities, and create sustainable livelihoods nationwide. As India works toward a more globally competitive and self-reliant economy, this sector is increasingly seen as a driver of innovation, resilience and inclusive growth.
Public Procurement
Public procurement typically accounts for roughly 15–20% of a nation's GDP, which makes an efficient procurement system vital to India's economy. A well-designed system that runs round the clock helps ensure government spending is allocated and used strategically. Standardising procurement across a country as large and diverse as India — spanning Central and State ministries, public sector enterprises, autonomous bodies, Panchayati Raj institutions and cooperative societies — was a significant challenge, given the fragmented, manual-intensive processes that existed earlier. GeM was created to bring a step change to this landscape and usher in e-governance through digitalisation.
Genesis of the Government e-Marketplace
GeM's foundations build on the JAM Trinity (Jan Dhan–Aadhaar–Mobile), which enabled financial inclusion through bank accounts, biometric identity, and mobile-based service delivery. This was reinforced by the "Digital India" programme, which strengthened online infrastructure and connectivity, paving the way for seamless e-delivery of government services.
By 2016, the government decided to overhaul the procurement processes previously run through the Directorate General of Supplies and Disposal, aiming for greater transparency, efficiency and accountability. Following recommendations from a Group of Secretaries to the Prime Minister, the Government e-Marketplace (GeM) was set up as a one-stop Special Purpose Vehicle for procuring common goods and services without intermediaries. GeM was launched on 9 August 2016 by the then Union Minister for Commerce and Industry, Smt. Nirmala Sitharaman, and developed initially as a pilot with technical support from the National e-Governance Division under MeitY. GeM operates as a 100% government-owned Section 8 company under the Department of Commerce.
About Government e-Marketplace (GeM)
GeM is an end-to-end digital procurement platform for government buyers, made mandatory under Rule 149 of GFR 2017, with several states amending their own procurement rules to align. Built on efficiency, transparency and inclusiveness, the platform actively promotes participation from under-served seller groups — micro and small enterprises, women and tribal entrepreneurs, persons with disabilities, startups, self-help groups, artisans, weavers and craftsmen under the One-Product, One-District initiative.
Since 2016, GeM has onboarded 1.46 lakh government buyers and over 24.96 lakh sellers and service-providers, listing roughly 10,500 product categories and 330 service categories. As of 18 May 2026, 3.87 crore orders worth ₹18.94 lakh crore in Gross Merchandise Value (GMV) have been fulfilled, with MSMEs contributing close to 45% of that total. Products and services are split almost evenly, at roughly 51.74% and 48.26% of total GMV respectively.
| Fiscal Year | Product GMV (Cr) | Service GMV (Cr) | GMV Grand Total (Cr) |
|---|---|---|---|
| FY 16-17 | 420 | - | 420 |
| FY 17-18 | 5,830 | 8 | 5,838 |
| FY 18-19 | 16,611 | 798 | 17,409 |
| FY 19-20 | 19,811 | 3,067 | 22,878 |
| FY 20-21 | 30,030 | 8,511 | 38,541 |
| FY 21-22 | 81,951 | 24,647 | 1,06,598 |
| FY 22-23 | 1,35,218 | 66,099 | 2,01,317 |
| FY 23-24 | 1,95,954 | 2,07,619 | 4,03,573 |
| FY 24-25 | 2,13,094 | 3,28,510 | 5,41,603 |
| FY 25-26 | 2,55,053 | 2,47,552 | 5,02,606 |
| FY 26-27 | 26,547 | 27,638 | 54,185 |
| Grand Total (Cr) | ₹9,80,519 | ₹9,14,448 | ₹18,94,967 |
| Percentage Mix | 51.74% | 48.26% |
Policy and Marketplace Interventions for MSMEs
Two major policy frameworks support MSMEs on GeM: the Public Procurement Policy for Micro and Small Enterprises (PPP-MSE, 2018) and the Public Procurement (Preference to Make in India) Order, 2017 (PPP-MII). The former, anchored under the MSMED Act and run by the Ministry of MSME, mandates a minimum 25% procurement target from MSEs, with sub-targets of 4% for SC/ST-owned MSEs and 3% for women-owned MSEs, alongside L1+15% purchase preference and EMD/tender fee exemptions. The latter, administered by DPIIT, has no fixed quota but gives purchase preference to Class-I local suppliers based on local content, supporting domestic manufacturing and self-reliance goals.
| Aspect | PPP-MSE, 2018 | PPP-MII |
|---|---|---|
| Full Name | Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 (amended 2018) | Public Procurement (Preference to Make in India) Order |
| Year | 2018 amendment (original 2012) | 2017 |
| Nodal Ministry/Dept. | Ministry of Micro, Small and Medium Enterprises | DPIIT, Ministry of Commerce and Industry |
| Objective | Inclusive procurement | Make in India / self-reliance |
| Legal Basis | Section 11, MSMED Act, 2006 | Rule 153(iii), GFR 2017 |
| Primary Objective | Promote MSE participation in government procurement | Promote domestic manufacturing and local value addition |
| Target Beneficiaries | Micro and Small Enterprises | Local suppliers/manufacturers |
| Core Policy Instrument | Mandatory procurement target | Purchase preference based on local content |
| Procurement Target | Minimum 25% from MSEs | No fixed quota |
| Social Inclusion Provisions | 4% sub-target SC/ST; 3% women-owned | None specific |
| Preference Mechanism | L1+15% purchase preference | Preference to Class-I local suppliers |
| Supplier Classification | UDYAM/MSME-registered | Class-I, Class-II, Non-local |
| Local Content Requirement | Not primary criterion | Central feature |
| EMD/Tender Fee Exemption | Available for eligible MSEs | Not a core feature |
| Focus Area | Inclusion, entrepreneurship, MSME development | Manufacturing, localisation, self-reliance |
| Linkage with National Initiatives | Inclusive growth, MSME promotion | Make in India, Aatmanirbhar Bharat |
| Applicability | Central Ministries/Departments/CPSEs | Central Ministries/Departments/CPSEs and procuring entities |
| Impact Orientation | Social and economic inclusion | Industrial and manufacturing competitiveness |
| Nature of Preference | Enterprise-category based | Product/local-content based |
| Key Policy Goal | Assured market access for MSEs | Strengthening domestic supply chains and indigenous capability |
MSMEs have consistently exceeded the mandatory 25% procurement target across the years since FY16-17.
| Fiscal Year | Total Order Value (Cr) | Gen MSE Order (Cr) | % of Gen MSE Order Value |
|---|---|---|---|
| FY 16-17 | 422 | 69 | 16.30% |
| FY 17-18 | 5,873 | 2,268 | 38.61% |
| FY 18-19 | 17,420 | 9,200 | 52.81% |
| FY 19-20 | 22,878 | 13,819 | 60.39% |
| FY 20-21 | 38,541 | 22,600 | 58.64% |
| FY 21-22 | 1,06,598 | 59,033 | 55.38% |
| FY 22-23 | 2,01,317 | 97,332 | 48.35% |
| FY 23-24 | 4,03,573 | 1,90,489 | 47.20% |
| FY 24-25 | 5,41,603 | 1,95,979 | 36.18% |
| FY 25-26 | 5,02,606 | 2,37,100 | 47.17% |
| FY 26-27 | 54,185 | 32,176 | 59.38% |
| Total | ₹18,40,831 | ₹8,27,885 | 44.97% |
| PPP-MSE Target | 25.00% | ||
| Variance (+/-) | 19.97% | ||
While the women-owned MSE sub-target is being met, the SC/ST MSE sub-target remains a work in progress, and GeM continues to work with stakeholders in that ecosystem to onboard, support and build resilience among SC/ST MSEs.
| Fiscal Year | Total Order Value (Cr) | MSE Order Value (Cr) | Women MSE Order Value (Cr) | SC/ST MSE Order Value (Cr) |
|---|---|---|---|---|
| FY 16-17 | 422 | 69 | 8 | 0 |
| FY 17-18 | 5,873 | 2,268 | 311 | 19 |
| FY 18-19 | 17,420 | 9,200 | 1,229 | 101 |
| FY 19-20 | 22,878 | 13,816 | 1,722 | 226 |
| FY 20-21 | 38,541 | 22,600 | 2,421 | 423 |
| FY 21-22 | 1,06,598 | 59,033 | 5,230 | 1,198 |
| FY 22-23 | 2,01,317 | 97,332 | 10,765 | 2,689 |
| FY 23-24 | 4,03,573 | 1,90,489 | 16,678 | 4,287 |
| FY 24-25 | 5,41,603 | 1,95,979 | 22,094 | 5,146 |
| FY 25-26 | 5,02,606 | 2,37,100 | 28,167 | 6,588 |
| FY 26-27 | 54,185 | 32,176 | 3,334 | 747 |
| Total (Cr) | ₹18,40,831 | ₹8,60,061 | ₹91,960 | ₹21,426 |
| PPP-MSE Target | 25.00% | 3.00% | 4.00% | |
| % to Total Order Value | 45.39% | 4.85% | 1.13% | |
| Variance (+/-) | 20.39% | 1.85% | -2.87% |
Key Marketplace Interventions
- #VocalForLocal Outlet Stores – 8 digital storefronts spotlighting products from women and tribal entrepreneurs, artisans, weavers, ODOP craftsmen, FPOs, SHGs and DPIIT-recognised startups, helping strengthen local supply chains and visibility for domestic manufacturing.
- Womaniya – a dedicated storefront with filters and catalogue icons that help buyers identify and procure from women-owned MSEs, supporting women's economic empowerment.
- Startup Runway – a channel for DPIIT-recognised startups to list innovative products across 14 recognised categories spanning healthcare, sustainability, mobility, IT and smart governance.
- GeM–UDYAM API Integration – a seamless two-step auto-registration process linking UDYAM registration with GeM seller onboarding via email/SMS prompts.
- GeM Sahay – a collateral-free, purchase-order-based working capital financing mechanism offering up to ₹25 lakh based on transaction history.
- TReDS Integration – invoice discounting through TReDS platform partners, improving liquidity and reducing payment delays, with further policy support from the Union Budget 2026–27.
- CSC Partnership – an MoU with Common Service Centres enabling 5 lakh+ village-level entrepreneurs to support seller onboarding and value-added services like catalogue photography and order management.
Role for Accounting and Finance Professionals
Chartered Accountants, Cost Accountants and finance professionals play a meaningful role in helping MSMEs formalise their businesses and adopt digital processes that connect them to wider supply chains. Their work today extends well beyond statutory compliance and tax advisory into financial planning, cost optimisation, working capital management, digital accounting adoption and business restructuring.
On GeM specifically, professionals can help MSMEs onboard, manage GST compliance and bid documentation, and adopt digital accounting and reporting systems. They can also guide MSMEs on leveraging GeM Sahay and TReDS financing for working capital, and on aligning with ESG and sustainability expectations from institutional buyers and investors.
Looking Ahead
Digital Public Infrastructure platforms like GeM demonstrate how technology-driven governance can widen economic opportunity while improving transparency, efficiency and accountability in public systems. By bringing together market access, financing and value-addition support in one digital ecosystem, GeM is reshaping the role of public procurement in India's development story. As the country moves toward its Aatmanirbhar Viksit Bharat 2047 vision, MSMEs — supported by initiatives such as #VocalForLocal, Womaniya, Startup Runway, GeM Sahay and TReDS — are positioned to drive manufacturing growth, employment generation and self-reliance.
2. Startup Genome. (2018, April). All Reports – Startup Genome.