Despite a manifold rise in procurement from SC/ST-owned MSEs, the 4% mandate remains unmet. Identify the structural constraints and suggest measures.

The Public Procurement Policy for MSEs Order, 2012, issued under the MSMED Act, 2006, says Central Ministries and CPSEs must buy 25% of their annual purchases from MSEs. Of this, 4% must come from SC/ST-owned MSEs [3]. Procurement from these firms rose 37-fold, from ₹99.37 crore (0.07%) in 2015-16 to ₹3,738.34 crore (1.59%) in 2025-26 [2]. The shortfall is structural, not a matter of time.

Structural constraints

• Sub-target sits inside a target already met: CPSEs buy 47.4% from MSEs but only 1.85% from SC/ST MSEs [4]. Any small firm satisfies the 25% target, so buyers have no reason to look for SC/ST suppliers.
• Weak accountability: 76 CPSEs were negatively marked in FY 2023-24 with no real corrective action. The cumulative shortfall is about ₹18,000–20,000 crore over six years [4].
• Credit-first subsidy design: the SCLCSS 25% capital subsidy applies only to machinery bought with institutional credit [1]. This excludes entrepreneurs who lack collateral.
• Refunds, not upfront help: loan-processing and bank-guarantee charges are reimbursed only after they are paid [1]. Nothing covers the working capital needed to deliver a contract once it is won.
• Thin supplier base: only 3,160 MSEs have received the capital subsidy since 2016, against 1,90,414 reported beneficiaries. Only 12,524 firms won orders in 2025-26 [1].
• Base effect: the large multiple starts from a tiny base. The share has risen only about 1.5 percentage points in a decade [2].

Measures

• Fix responsibility: set CPSE-wise annual sub-targets, require disclosure of shortfalls, and link penalties to MoUs with real consequences for managers [4].
• Connect the data: integrate the MSME Sambandh portal with GeM and build a national vendor directory [4], so that claims of "no supplier available" can be checked.
• Credit convergence: link Stand-Up India and CGTMSE collateral-free loans to SCLCSS so that first-time entrepreneurs qualify.
• Support after the award: NSIC-backed working capital and upfront guarantees for SC/ST firms that win tenders; set-aside tenders in selected categories.
• Deepen capacity: expand GeM-aligned training, already 55% women and covering 24 Aspirational Districts [1], to more tribal and North-Eastern regions.

NSSH has shown that state purchasing can create demand for SC/ST enterprise. Turning that into the full 4% needs firm accountability, credit that reaches the most excluded, and support after contracts are won. This would give real effect to Article 46 and help move SC/ST communities from job-seekers to job-creators.