As per news reports, the Uttar Pradesh government is likely to mandate 25% procurement by state government departments and public sector undertakings (PSU) from the local micro, small and medium enterprises (MSMEs). Reports also indicate that the state is home to about 4 million MSMEs and the sector is the second largest employer after agriculture.
The proposed procurement policy is expected to provide a major boost to the which has been facing a slowdown over the past few years.
A former UP chief secretary was quoted saying, ‘the state government procurement was to the tune of more than 20% of its annual budget.’ The proposed quota of 25% procurement from the local MSMEs would peg the total market at ₹ 25,000 crore, which would give a major thrust to the sector.
As per Indian Industries Association (IIA) executive director, D S Verma said, ‘in 2014, UP MSME Procurement Policy had mandated 20% procurement from the state MSMEs by the government departments and agencies but the target was never achieved because to various factors, including tough eligibility criteria.’
In fact, in the past year, Yogi Adityanath’s government had launched One District One Product (ODOP) scheme to revive the MSME sector with easy credit and marketing support.