For startups, no relaxation in procurement norms for certain items

Government agencies may not relax procurement norms for startups on prior experience and turnover criteria in respect of goods that might have implications on public safety and health.

The government had earlier said that all central ministries and department "may relax" condition of prior turnover and prior experience in public procurement to all startups if they meet quality and technical specifications.

But a doubt had arisen if it makes optional for central ministries and departments to relax the condition of prior experience and turnover in public procurement to startups, said an office memorandum of Expenditure Department.

It said that "normally" for all public procurement, government departments and ministries should ensure that experience and turnover criteria are relaxed.

"However, there may be circumstances (like procurement of items related to public safety, health, critical security operations and equipment) where procuring entities may prefer the vendors to have prior experience rather than giving orders to new entities.

"For such procurements, wherever adequate justification exists, the procuring entities may not relax the criteria of prior experience/ turnover for the startups," the statement said.

India has the third-largest number of startups globally. In January, Prime Minister Narendra Modi had unveiled a slew of incentives for them including tax holiday, inspector raj-free regime, capital gains tax exemption, Rs 10,000 crore corpus to provide funds, and relaxation in procurement norms.

In its October monetary policy review, the Reserve Bank said startups can raise external commercial borrowings (ECBs) of up to 3 million in a financial year, with a view to boosting innovation and promoting job creation.