MSME plays an important part in the country's economic progress. One main reason such business units struggle is their inability to compete due to the financial crisis at the state-level tenders. To reduce such difficulties between the government and small businesses, it has arranged to exempt all types of MSME tenders with a nil tender fee paid.
The Digital Procurement scenario is becoming huge, and online tender platforms make MSME applications to Government tenders simpler. This blog delves deeper into the eligibilities, benefits, and processes through which MSMEs can avail themselves of exemptions on tender fees.
What is MSME Tender Fee Exemption?
This is a government initiative to encourage small businesses to participate in public procurement without the high tender fees that may burden them. Large organizations usually win tenders because of their financial capabilities. To level the playing field, the government provides MSMEs with an exemption from paying tender fees, which can be a significant cost-saving advantage.
This exemption is a part of many MSME-friendly policies under the Public Procurement Policy for MSMEs, which requires a percentage of tenders from the government to be allocated only to small businesses. There are also some exemptions on Earnest Money Deposits (EMD) where MSMEs can easily enter tenders without any hassle.
Eligibility Criteria of MSME to Obtain Exemption in Tender Fee
An enterprise may become eligible to claim an exemption on the payment of tender fees, provided such enterprise fulfills the below conditions:
Registered as MSME: Its registration certificate has to be from the Ministry of MSME which has a Udyam Registration.
NSIC Certificate: Such exemption in payment of tender fee under government tender to MSME can be easily obtained only upon having a certification of National Small Industries Corporation – NSIC.
Carried Out Eligible Activities: The enterprise should be involved in manufacturing, service, or trading activities that qualify under the MSME schemes.
Active Status: The MSME concerned should not have defaulted in any previous tender obligations and should be in good standing with relevant authorities.
Government Sponsored Tenders: The exemption is limited to government tenders only and not private procurement.
Benefits of Exemption of Tender Fee for MSMEs
The exemption of tender fee allows MSMEs to enjoy some benefits in participation in the competitive procurement landscape:
1. Cost Savings
Tender fees can range from a few thousand to several lakhs of rupees, making it difficult for small businesses to afford multiple tender applications. Exemption from tender fees allows MSMEs to participate in more government tenders, increasing their chances of securing contracts.
2. Increased Participation
Since MSME tenders are usually expensive, most small businesses avoid government procurement. Due to the exemption, more MSMEs will be able to actively participate in government tenders for MSMEs, thereby increasing competition and service offerings.
3. Level Playing Field
Without financial constraints, MSMEs can compete with large companies in eProc tenders and help them gain high-value contracts and expand their business footprint.
4. Promotion of New Entrepreneurs
The major problem that new businesses and startups face is funding. The tender fee exemption provides them with an opportunity to participate in government tenders without paying the high fees, thus making it a fair chance for their growth.
5. Preferential Treatment in Public Procurement
Most of the government tenders for MSMEs are set aside for small businesses, and this way, MSMEs get a share of public contracts. This promotes business opportunities and grassroots economic growth.
How to Apply for MSME Tender Fee Exemption?
If you are an MSME looking to avail of the tender fee exemption, here are the steps to be followed:
Step 1: Registration as an MSME
Get your business registered under the portal, Udyam Registration, and get the certificate for Udyam Registration.
Step 2: Getting NSIC Certification
Apply for the NSIC or National Small Industries Corporation certificate. This is often a required document for availing the MSME tenders facilities.
Step 3: Fetch the Appropriate Government Tenders
Platforms such as Tender Grid can be used to search the various government tenders available for MSMEs that have fee exemptions.
Step 4: Submit the Documents
Once the government tender application is submitted, an MSME registration certificate, NSIC certificate, and other mandatory documents should also be submitted as evidence to enjoy the exemption.
Step 5: Follow Up and Track Status
Once submitted, track the status of tenders through the e-procurement portal regarding your application.
Common Challenges and How to Overcome Them?
Notwithstanding that, MSMEs could face certain challenges while making an application for MSME tenders. Here's how they can overcome this:
Lack of Awareness: A lot of companies are not aware of their entitlement to fee exemption. MSMEs should, therefore, log in to the tender portals and check for tender opportunities.
Documentation Issues: Failure to provide adequate or correct documentation may result in disqualification. Ensure that all the required documents are current and submitted correctly.
Technical Issues: Navigating the eProc tenders portal is not easy. Alternatively, one can seek assistance from industry experts and tender facilitation services.
Government Schemes Supporting MSME Tender Participation
Apart from the tender fee exemption, several government schemes are in place to encourage MSMEs to participate in public procurement:
Credit Linked Capital Subsidy Scheme (CLCSS): Enabling MSMEs to develop technology and infrastructural facilities.
MSME Market Development Assistance: Provides access to new markets for MSMEs, along with trade fair participation.
Zero Defect Zero Effect (ZED) Certification: Provides incentives to MSMEs with high-quality manufacturing standards.
These schemes must be explored by MSMEs to maximize their opportunities in government tenders.
Conclusion
Exemption of the tender fee by small businesses can allow them to easily get involved in government tenders. Since many MSMEs are faced with great financial hurdles so far to bid on various competitive procurements, hence, such action increases the involvement of the MSME.
With the use of Tender Grid, MSMEs can access tenders and determine their eligibility with ease and smooth application. Staying abreast of this and taking advantage of the opportunities would allow MSMEs to clinch valuable government contracts and boost their market reach.
If you are an MSME, take up the tender fee exemption today and confidently step into the government procurement world!
