In order to increase participation of Startups in Public Procurement Govt. of Odisha has notified various relaxations under (a) ‘Prior experience’ criteria (b) ‘Prior turnover’ criteria (c) ‘Submission of EMD’ criteria. The details of relaxations to Startups and necessary Govt. notifications are as follows.

  1. Pursuant to provision contained in para 10.2.1 of Odisha Startup Policy – 2016, Govt of Odisha has notified vide Notification No-S&I(IED)-09/2018-1696/MSME, dated 13/03/2018 that;

  1. There would not be any minimum turnover requirement for any MSMEs and Startups participating in public procurement;

  2. All Govt department and agency will additionally relax condition of prior experience with respect to Startups in all public procurements subject to meeting of quality and technical specifications. (Further, vide Notification no No-27928/F,FIN-COD-MISC-0008-2017, dated 16.10.2020 The condition of prior turnover and prior experience has been relaxed / waived for local MSEs and Startups, subject to meeting of quality & technical specifications)


  1. Further, vide Govt. notification no – 13681/F, FIN-CODES-RULE-0005-2015, dated 19.04.2018 Startups are exempted from paying Earnest Money Deposit (EMD) and concessional payment of Performance Security in Public procurement.

Draft guidelines for public procurement Support

Background

The Government of Odisha has announced its Odisha Startup Policy 2016 on April 4th, 2016 which covers all the aspects of the Startup ecosystem for creating a congenial support system to promote the growth of Start-ups. It has clear guidelines on the definition, the registration process and the incentives available for Start-ups. The policy was released in 2016 and was last amended in 2018. The policy is sector agnostic as the incentives/ benefits offered to Start-ups are not restricted to specific sectors. With the Start-ups coming up with innovations and new ideas, they need a market place to exhibit & make a sustainable enterprise for a long run. To further encourage start-ups, Government of Odisha is setting up special institutional mechanism to procure the product of relevance from Start-ups by providing platform to demonstrate the value the Startup can add and market to various Government departments and agencies to increase adoption of their solutions. Besides Government has done relaxed Norms of Public Procurement for Start-ups by providing equal platform to Start-ups vis-à-vis the experienced entrepreneurs/ companies in public procurement.

Government department and agencies includes Government departments, State PSUs, Boards, Development Authorities, Improvement Trusts, Local bodies, Co-operative institutions and Statutory & Autonomous bodies

  • Definition of Startup
An Entity recognised as Startup under “Startup Odisha” or “Startup India” initiative with valid recognition certificate. Start-ups recognised under Start-up India and incorporated outside Odisha should have employed 50% of their workforce in Odisha as per the Odisha Startup Policy guidelines.
  • Definition of Goods
The term ‘goods’ used in this guidelines includes all products or services provided by Start-ups such as articles, materials, commodities, livestock, furniture, fixtures, raw materials, spare parts, instruments, machinery, equipment, industrial plant etc.
  • Definition of Public Sector
The term Public Sector refers to all institutions in a country that are publicly controlled and funded, including central, regional and local government institutions such as Ministries, government agencies, publicly owned enterprises and other entities that deliver public services or programs

Relaxation in Public Procurement norms for Start-ups

In the policy, the Government has made necessary relaxations to provide opportunity for start-ups to to scale up and to allow them to compete with experienced entrepreneurs and companies in public procurement
To achieve this, the Government of Odisha provided relaxations in prior experience, prior turnover and exemptions in EMD criteria to start-ups through Government Resolution. As per a notification released in March 2018, the MSME Department in Odisha started exempting start-ups registered under ‘Startup Odisha’ and ‘Startup India’ from the prior experience and prior turnover criteria.

Relaxation in Prior Turnover criteria:  Relaxation is provided to startups from the criteria of Prior Turnover and the condition of past supply of the item under purchase.

Relaxation in Prior Experience criteria: Relaxation is provided to startups form ‘prior experience’ in tender document for Startups. The tender will not include any such conditions for prior experience

Relaxation in ‘submission of EMD’ criteria: Relaxation is provided to Startups from paying tender fees and Earnest Money Deposits (EMD).

Furthermore, the MSME Department mandates that 20% of total procurement for any state department/public sector company in Odisha must be from a MSME or Startup.

Direct Procurement Model:

Procurement of goods from exclusive list of Products/Services of Start-ups without quotation (up to the value of Rs.10,00,000/-) Purchase of goods/services from Start-ups up to the value of Rs.10,00,000/- (Rupees ten lakh only) on each occasion may be made without inviting quotations or bids from the Startup Product list notified by MSME Department.

Procurement through limited tenders:

Procurement of goods from exclusive list of Products/Services of Start-ups through limited tender (up to the value of Rs.50,00,000/-); In respect of product/service for which a list notified by Startup Product / Service enlisting committee and purchase of such Products/Services by all Departments of Government, Quasi-Government agency and State owned corporations should be only from exclusive list through limited tender if the amount of procurement is more than Rs.10 lakh. Such limited tenders will be floated among recognised Start-ups only.

Preference to Local MSEs/Start-ups in Procurement of Works;

Start-ups registered under Start-up Odisha and/or Start-up India are eligible for exemption from prior experience and prior turnover criteria while participating in open tender public procurement. Participating Start-ups are also exempted from Earnest Money Deposit (EMD). As per the notification released on 20th May 2021 Government allowed Startups a concessional payment of Performance Security @25% of the value of performance security on being selected in the bidding process in case of procurement of works in line with procurement of goods and services wherever minimum turnover and prior experience subject to meeting of quality and technical specifications.

 

Reservation for Start-ups in Public Procurement:

There shall be a reservation of 10% of total public procurement for Start-ups in addition to 20% reservation of MSMEs by State Ministries/Departments/State PSUs (MSME Department notification no-1696, dated 13.03.2018).

Grievances Redressal

Start-ups can submit all public procurement related grievances to be submitted to Grievance Redressal Committee constituted under the Chairmanship of Director of Industries.

Sl.noTitleDesignation
1Additional Secretary, MSMEMember
2Director, DEPM Member
3MD, OSICMember
4CEO – Startup Odisha Member Convenor
5Addl. Director, DI, Cuttack Member
6 GM-DIC, BhubaneswarMember
7GM-DIC, Cuttack Member
8Industrial/Start-up Advisor Co-opted Member
9Subject Matter expert(s) Co-opted Member(s)

7) Startup Product / Service enlisting Evaluation committee

A committee will be constituted under the Chairmanship or Director of Industries with following members to enlist the product or service of Start-ups.

The committee will meet quarterly to select product or service to be enlisted or delisted from the exclusive list notified for procurement. Based on the assessment and recommendations of Start-up Odisha, the committee shall enlist or delist the start-ups’ products/services

GEM: Government e marketplace

GeM, Government e-marketplace was launched on August 9, 2016 as a centralised procurement platform to increase efficiency of public procurement process in India. GeM is a marketplace to facilitate the sale and purchase of goods of services by various Ministries and agencies of the Government. GeM is an electronic platform which provides an end-to-end online Marketplace for Central and State Government Ministries / Departments, Central & State Public Undertakings (CPSUs & SPSUs), Autonomous institutions and Local bodies, for procurement of common use goods & services in transparent and efficient manner. GeM has created a dedicated marketplace category for all Startups to list their products and services.

Grand-challenges & Hackathons:

Though GeM portal have provisions to procure Start-up Products and Services, the registration and evaluation takes considerable amount of time (15 days to 16 weeks). In order to expedite the validation and procurement of Innovative products/services from start-ups, organizing Hackathons and Grand-Challenges can be one of the probable channel. These exercises provide better picture about practical application of solutions/technologies developed by start-ups. Prospective Government buyers can publish the problem statements/Use-cases on Start-up Odisha portal to procure compatible as well as Innovative solutions from Start-ups. Start-up Vendor(s) can propose solution(s) to the problem statements through online. These solutions shall be evaluated by Technical Committee of the client department, on the basis of feasibility and scalability. The best solutions among the proposals shall be piloted with the support of Client department and Start-up Odisha.The client departments shall appoint Nodal Innovation Officer to facilitate such Hackathons and Grand-challenges. Commercial Orders can be issued upon the successful and satisfactory completion of pilot projects. Such procurements can address Quality as well as Cost-Effectiveness, ensuring better “Value for the money”

The total worth of such procurements can be limited to Rs. 1 Crore at the beginning. This limit can be extended further depending upon the satisfactory reports from three or more Government clients who have procured the start-up’s products/services.

Incentives:

Startups can list multiple products and services with minimal technical specifications and sell their products to Govt buyers under 13 globally recognized Startup sub-sectors, namely; Advanced Manufacturing and Robotics, Advertising [AdTech], Agriculture [AgTech and New Foods], Artificial Intelligence, Big Data and Analytics, Augmented/ Virtual Reality, Blockchain, Clean Tech/ Renewables, Consumer Home Electronics [+Wearables, Smart Devices], Cybersecurity, Education Tech [EdTech], Fintech, Health and Life Sciences, WaterTech etc.

Procedure to avail the incentive

To avail the above benefits, startup projects will have to submit a copy of the Udyog Aadhar/ Udhyami Registration and NSIC/GeM registration, along with a copy of approval / registration as a startup project from Startup Odisha and/or Startup India.

  • Startup will have to register on GeM portal for availing the incentives listed above.
  • For more information the startups can visit the website of GeM portal on following