The government has decided to expand the mandate of Government e-Marketplace (GeM) by allowing procurement by cooperatives.

Presently, the registration of cooperatives as buyers was not covered within the existing mandate of Government e-Marketplace (GeM).

The move will help over 8.54 lakh registered cooperatives and their 27 crore members, as they would get products at competitive rates from the GeM portal.

The decision was taken by the Union Cabinet chaired by Prime Minister Narendra Modi.

Government e-Marketplace (GeM)

• Government e-Marketplace is a government-owned Section 8 company set up under the aegis of department of commerce for procurement of goods and services by central and state government organisations.

• Public procurement involves purchase of goods and services by governments with an aim to not only carry day-to-day tasks but to also create social and economic infrastructure.

• In India, public procurement accounts for roughly 20 per cent of the GDP and therefore, an efficiently run public procurement process is critical to the  economy.

• In order to improve transparency of decision-making in the public procurement process and to reduce malpractices, the Union government decided to set up an online marketplace for public procurement.

• Government e-Marketplace (GeM) is the national public procurement portal offering end to end solutions for all procurement needs of central and state government departments, PSUs, autonomous institutions and local bodies. 

• A special purpose vehicle (SPV) by the name of Government e-Marketplace (GeM SPV) was set up as the national public procurement portal.

• Since its commencement on August 9, 2016, GeM has transformed public procurement in the country by leveraging technology and making procurement contactless, paperless, and cashless.

• The platform reduces manual process inefficiencies and human interventions in procurement and enables increased coverage, access, and efficiency of faceless, standardised public procurement.

• It provides the tools of e-bidding, reverse e-auction and demand aggregation to facilitate the government users, achieve the best value for their money.

• The purchases through GeM by government users have been authorised and made mandatory by the ministry of finance by adding a new Rule No.149 in the General Financial Rules, 2017.

• The portal provides a wide range of products from office stationery to vehicles. Automobiles, computers and office furniture are currently the top product categories. Services, including transportation, logistics, waste management, webcasting and analytical, are listed on the portal.

• The annual gross merchandise value from the GeM platform has increased from Rs 16,972 crore in 2018-19 to Rs 1,06,760 crore in 2021-22.

Functioning of GeM:

• GeM helps governments achieve the best value for the taxpayers’ money by carrying out efficient public procurement using tools such as e-bidding, reverse e-auction and demand aggregation.

• GeM has provided the government procurement agencies an option to select MSME vendors for procurement which has helped MSMEs to significantly increase their sales.

• Any procurement up to Rs 25,000 can be directly purchased from available vendors on the GeM if it meets the required quality, specification and delivery period.

• For procurement above Rs 25,000, purchases have to be made following procedures such as price comparison, bidding or reverse auction, where the criterion of the lowest price among available suppliers on the GeM has to be followed to ensure price efficiency.

• A chat-bot called GeMmy has been launched to assist the vendors and buyers.

What is the significance of onboarding cooperatives on GeM?

• As per the existing mandate, goods and services registered on the GeM portal are not available for use by private sector buyers. Suppliers (sellers) can be from across all segments — government or private.

• The cooperative movement in India has grown significantly, playing an important role in addressing the developmental needs of underprivileged classes in India, especially in agricultural, banking and housing sectors. 

• There are currently 8.54 lakh registered cooperatives. These cooperatives collectively procure and sell in large quantities. 

• Allowing cooperative societies to register on GeM as buyers would help cooperatives in getting competitive prices through an open and transparent process.

How will the decision be implemented?

• The validated list of cooperatives to be onboarded on GeM for the pilot as well as subsequent scale-up basis will be decided by the ministry of cooperation in consultation with GeM special purpose vehicle (SPV). 

• This will help in ensuring that the technical capacity and logistics requirements of the GeM system are taken into account while deciding the pace of onboarding of cooperatives as buyers on GeM.

• The GeM will provide a dedicated onboarding process for cooperatives, technical infrastructure to support additional users on existing portals, as well as assistance to cooperatives for onboarding and transaction journey via available contact centres, in-field training and other support services.

• The GeM will initiate suitable actions, including the creation of necessary features and functionalities on the GeM portal, upgradation of infrastructure, strengthening of the helpdesk and training ecosystem and onboarding of cooperatives. 

• The cooperation ministry will issue necessary advisories to encourage the cooperative societies to make use of the platform for the procurement of goods and services.

• To protect the interests of the broader seller community on GeM and ensure timely payments, the modalities of payment systems would also be decided by GeM in consultation with the ministry.

• The overall pace and mechanism of roll-out would be decided by the cooperation ministry. The milestones and target dates will be aligned mutually between the ministry and GeM.

• Since the societies have more than 27 crore members, procurement through GeM would not only economically benefit the common man, but would also enhance the credibility of the cooperatives.

• While the GeM SPV will continue to leverage the existing platform and organisation for supporting the proposed expanded mandate, it may need some investments in additional technology infrastructure and training and support resources. 

• To cover these incremental costs, GeM may charge an appropriate transaction fee from cooperatives, to be decided in mutual consultation with the ministry of cooperation. 

• Such charges will not be more than the charges that GeM levies on other government buyers.

• This will be planned to ensure the self-sustainability of operations for GeM, and hence no major financial implication is expected for the government.

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