The Government e-Marketplace is one of India’s major initiatives on reforming its public procurement system. Through a completely paperless, cashless, and system-driven electronic marketplace, it enables the procurement of common use goods and services with minimal human interface, thereby promoting efficiency, transparency, security, and social and economic transformation.
Background and Problem
Public procurement, like in many governments, is deemed a tough jungle of multi-layered, antiquated, overlapping rules, procedures, and systems that are easily navigated by the corrupt and are dodged by the honest and upright. With the absence of best practices, corruption in the procurement system can further charge up public projects by 50%. While there are attempts to carve off even just the surface layers of such an exploitative system to make room for transformative reforms, the complexity of discourse and politics surrounding its reform paved little way for meaningful successes and impacts. In India, the share of public procurement in GDP is 20% according to the World Bank. Yet despite this, it remains among the 25 economies in the world that did not even have an electronic portal dedicated to procurement. A few states had already made efforts to inject technology in their procurement system, but none made it far in bringing a complete paradigmatic shift like the Government e-Marketplace (GeM).
Solution and Impact
The GeM is a one-stop online market platform where all authorized representatives of the central government departments or state governments/ PSUs/ autonomous bodies in India can make a bid and direct purchases of common goods and services from a variety of sellers. Its key features include: (1) a rich list of various products and services; (2) direct purchase and electronic bid options; (3) integrated payment system; (4) buyer/supplier/service provider registration; (5) market search or comparison; (6) online ordering or contract generation, and; (7) contact center and online training modules. With GeM, efficiency in the purchase of goods and services is ensured because purchase transactions are integrated end-to-end and last only a few minutes, with an extra feature for assessing price reasonability.
There are no longer tender-based specific requirements of general goods and services even within the same buyers’ agencies for these are already replaced with market-based generic requirements. The portal also promotes centralization and standardization of specifications of products and services, with the latter categorized into universal service levels and with cost comparisons enabled. In doing so, GeM is able to eliminate confusion and discrepancies in the service rates offered by some service companies. GeM benefits government agencies through promoting ease of buying and transparency. Because transactions are made online, the platform eliminates human interaction in vendor registration, order placement, and payment processing. SMS and email notifications are sent to both buyer and seller. In addition, GeM removes direct purchase rates and purchases by tender and rate contract, hence, it is able to assure government agencies’ substantial public savings with the reduction in prices of procuring goods. Sellers, for their part, are assured of 100% sale and timely delivery of payments, as the platform strictly requires a ten-day purchase deadline to buyers. This change in the payment procedure is important to them since payments are not truly guaranteed in the previous procurement system. They are also assured of consistent and uniform purchase procedures, which further facilitate their convenience in doing business.
Finally, among all the businesses that benefit in the new procurement setup, it is the small-scale industries (SSIs) that are provided with maximum benefits since they are given an equal chance to compete with large-scale manufacturers with competitive pricing. GeM offers filters for selecting goods which are Preferential Market Access (PMA)-compliant and items produced by Small Scale Industries (SSI), making it possible for buyer agencies to procure local SSI goods. This way, GeM becomes not only a technological innovation but a social and economic revolution for marginalized industries as it creates fair and transparent opportunities in such a big sector as the government.
The GeM portal was launched in August 2016 with the intention of creating an online purchase platform for all Indian government offices. At the time, the platform was using a GeM Version 2.0. In July 2017, five states and a union territory including Gujarat, Arunachal Pradesh, and Telangana signed a Memorandum of Understanding (MoU) with GeM for smart procurement of goods and services. Through this agreement, the states committed to put in place a mechanism for the smooth implementation of the GeM framework and to ensure timely payment by state departments to the registered sellers in GeM. The Directorate General of Supplies & Disposals (DGS&D), designer of GeM, at the time, reported that over 20,000 seller companies selling over 50,000 products have already registered on the portal.
Later in 2017, the number of states adopting GeM grew to nine Indian states: Gujarat, Andhra Pradesh, Telangana, Puducherry, Assam, Arunachal Pradesh, Jharkhand, Manipur, and Uttar Pradesh. Finally, in 2018, GeM already had more than 42,000 sellers in its registry offering 380 product categories. By this time, the portal had also upgraded its operating system (Version 3.0), which incorporates all the learnings from GeM Version 2.0. The updated GeM system offers new and improved features like standardized and enriched catalog management, powerful search engine, real-time price comparison, template-based Bid and RA creation, demand aggregation, e-EMD, e-PBG, user rating, and advanced MIS and analytics, among others. Parallel to the GeM system’s migration to Version 3.0 had been the series of training activities for sellers and service providers to help them transition from Version 2.0 to Version 3.0.