Despite women constituting nearly 50% of the population, their representation in business ownership is disproportionately low. In India, women own only 20% of all enterprises, with 82% of these being micro units, often operating as sole proprietorships in the informal sector. Informal women worker-led businesses start from way behind the starting line, facing significant challenges in accessing markets, as well as finance, and resources. Public procurement can be an important mechanism to help bridge this gap and support the growth of women-led enterprises.
What does public procurement mean?
Public procurement refers to the government purchasing services and products from businesses to promote their growth. Governments worldwide are increasingly recognizing the potential of public procurement as a strategic tool to promote inclusive and sustainable development while ensuring value for money.
In India, the volume of public procurement is currently more than USD 700 billion and is expected to grow as the country aims to become a high-income economy by 2047. However, despite the Government of India’s policy that stipulates 3% of contracts be reserved for women-owned businesses, only about 1.24% of contracts were awarded to such businesses in the 2023-24 fiscal year. This highlights the significant scope for increasing the participation of women-led enterprises in public procurement.
Public Procurement Policies in India
India’s Public Procurement Policy for Micro and Small Enterprises (MSEs), introduced in 2012 and amended in 2018 and 2022, is the primary policy framework promoting the participation of women in public procurement. The policy mandates that ministries, departments, and public sector undertakings target 25% of procurement from the MSE sector, with 3% specifically reserved for women-owned businesses. Additionally, the policy offers a relaxation in criteria such as prior turnover, experience, timely payments and exemption from payment of earnest money deposits to support women-led SMEs.
Platforms for Public Procurement
With platforms like GeM (Government E-marketplace) incoming, the tendering processes of public procurement for smaller enterprises has become accessible. With our experience of working with informal women workers collectives, we had shared certain recommendations that could make it easier for smaller enterprises to register and benefit from the platform. You can read them here.
The Womaniya initiative on GeM is an example of creating dedicated platforms to support women-owned businesses. Through a separate category on the GeM platform, women entrepreneurs can sell their products directly to government buyers, enabling them to access a broader market.
Another government platform like ONDC, an open network for digital commerce, levels the platform for smaller sellers, unlike other e-marketplaces such as Amazon, Flipkart, Meesho, etc. that heavily depend upon money invested by sellers to make their products visible on their platforms.
Our experience with onboarding our two producer cooperatives – Lok Swasthya Mandali and Abodana Handicraft Cooperative revealed certain benefits like the returns and refunds are defined by the seller, the customer data is given to the sellers, unlike other marketplaces that may hide customer data and sourcing and all sellers are equally visible regardless of which app they registered through. However certain challenges like heavy reliance on third party applications for registration and categorization, technical barriers and a complicated digital monitoring process were hindering its usage.
Challenges and the Way Forward
Despite these initiatives, challenges remain. In 2023, the World Bank conducted a study to explore why women-owned businesses in India receive a low number of contracts. It found that awareness about public procurement policies is low, especially among rural women. The complex procedures involved in filing for public procurement opportunities often discourage participation. Absence of regional languages on the interface and registration process limits the scope. Additionally, limited financing options and stringent requirements from microfinance institutions further hinder the growth of women collective enterprises (WCEs). Our report with CIS (Centre for Internet Society) documents the experiences of our cooperatives with public and private procurement platforms can be found here.
To overcome these challenges, there is a need for awareness campaigns and training to help women entrepreneurs understand public procurement opportunities. Streamlining the application process, ensuring prompt payments, and offering targeted support to women-led businesses can greatly boost their participation in public procurement.
Internationally, several countries have implemented policies that support women-owned businesses through public procurement. For example, Kenya reserves 30% of procurement spending for women-owned enterprises, youth, people with disabilities, and SMEs. Tanzania and South Africa have similar affirmative procurement policies. These global examples demonstrate the potential of public procurement to promote gender equality and economic empowerment.
Conclusion
Public procurement can be a key pathway to mainstream women’s participation in the economy.. State-level initiatives like those in Odisha, where Self Help Groups (SHGs) and State Rural Livelihood Missions (SRLMs) are actively participating in public procurement, can serve as models for other regions. By learning from global best practices and addressing the challenges faced by women-led enterprises, India can explore the full potential of public procurement as a driver of inclusive and sustainable development.
References
- https://blogs.worldbank.org/en/governance/indias-government-e-marketplace-technology-sustainable-development
- https://msme.gov.in/public-procurement-policy
- https://idrc-crdi.ca/en/stories/kenyan-women-bid-success-public-procurement#:~:text=Kenya’s%20Access%20to%20Government%20Procurement,youth%20and%20persons%20with%20disabilities