"Public procurement can be a potent instrument of MSME development." Examine with reference to recent reforms on the GeM platform.

Government buying gives firms a large and assured market. The Public Procurement Policy for MSEs requires central ministries and CPSEs to buy 25% of their annual purchases from Micro and Small Enterprises (MSEs) [4]. Recent reforms on the Government e-Marketplace (GeM) aim to make this mandate cheaper to use, easier to finance and open to more sellers, but some gaps remain.

How procurement develops MSMEs

• Assured demand: central buyers sourced ₹93,017 crore (43.58%) from MSEs in 2024-25, far above the 25% floor, and 358 items are reserved for MSEs [3].
• Inclusion: within the 25%, 4% must come from SC/ST-owned MSEs and 3% from women-owned MSEs [4].
• Transparency: a single digital marketplace reduces buyers' discretion and rewards formal, registered firms.

Recent GeM reforms

• Lower entry cost: orders up to ₹10 lakh pay no transaction charge, mid-size orders pay 0.30%, and about 97% of orders are now fee-free [1]. Caution Money was abolished in July 2025, and OEM vendor assessment fees have been cut by 66–92% [2].
• Easier credit: the Budget 2026-27 announced a GeM–TReDS link, compulsory TReDS settlement by CPSEs, and a CGTMSE guarantee for invoice discounting [5]. GeM SAHAY gives collateral-free loans against purchase orders [2].
• Outreach: under its MoU with GeM, Laghu Udyog Bharati runs help counters for entrepreneurs with low digital skills [2].

Limitations

• Orders are not rupees: the 97% figure counts orders, not value. The biggest saving, a cap cut from ₹72.5 lakh to ₹3 lakh, goes only to orders above ₹10 crore, which micro firms rarely win [1].
• Delayed payments: about ₹8.1 lakh crore is stuck in late payments to MSMEs, and the ODR portal settled only 17 cases in eight months [6]. TReDS helps sellers survive a delay but does not penalise buyers who pay late.
• Equity gap: procurement from SC/ST-owned MSEs has stayed below the 4% sub-target [4].
• Platform integrity: the CAG found that the security audit of GeM's e-bidding module had not been done, and that payments were often delayed [7].

Overall, the GeM reforms have made public procurement cheaper and better linked to credit for MSEs, so the statement holds largely true. The next steps should be: link GeM with Samadhaan so late payments are flagged automatically, set CPSE-wise sub-targets with penalties tied to each CPSE's MoU [6], and finish the security audit of the platform. With these, procurement can become a lasting driver of inclusive MSME growth, in line with SDG 8.