For years, small businesses in India faced a frustrating reality: the government was one of the largest buyers in the country, but actually selling to it was a bureaucratic nightmare. Tenders required expensive documentation. Earnest Money Deposits locked up working capital. Procurement decisions were made behind closed doors, and without the right connections, a small manufacturer in Ludhiana or a textile unit in Surat had little chance of breaking through.

The Government e-Marketplace (GeM) has gone a long way toward changing that.

Launched in August 2016, GeM is a 100% government-owned national public procurement portal through which Central and State Government ministries, departments, PSUs, autonomous institutions, and local bodies purchase goods and services.

As of FY 2024-25, the platform surpassed ₹5 lakh crore in Gross Merchandise Value (GMV), crossing that milestone more than 18 days before the financial year closed, a remarkable feat for a portal that started as a relatively modest experiment in digital governance. The numbers tell a clear story: GeM has become serious infrastructure for public procurement, and MSMEs are among its biggest beneficiaries.

Scale and Participation

As of February 2025, over 22 lakh sellers and service providers are registered on GeM, contributing to a diverse and competitive procurement ecosystem. The buyer side is equally substantial, as of early March 2025, there were over 1.62 lakh primary buyers and 2.28 lakh secondary buyers registered on the portal, spanning 11,006 product categories and 332 service categories.

The sheer breadth of categories matters for MSMEs. A craft producer, an IT service provider, a furniture manufacturer, and a logistics firm can all find relevant procurement opportunities in the same place. The government’s expansion of the platform, 19 new service categories were added in FY 2024-25 alone continuously widening the net.

The Policy Foundation: Mandatory Procurement Targets

Before getting into how GeM works for MSMEs, it helps to understand the policy architecture underneath it. The Public Procurement Policy for Micro and Small Enterprises (MSEs), introduced under Section 11 of the MSMED Act, 2006, mandates preferential treatment for MSEs in procurement processes.

Central Government Ministries, Departments, and CPSUs are required to procure at least 25% of their annual procurement from MSEs.

Within that 25%, a sub-target of 4% is reserved for MSEs owned by SC/ST entrepreneurs and 3% for MSEs owned by women entrepreneurs.

This mandatory target is arguably the single biggest structural driver of MSME sales on the platform; it creates demand that government buyers are legally obligated to fulfil.

What MSMEs Actually Get on GeM

Registration is the starting point. An MSME registers as a seller, updates its organisation profile with company details and PAN validation, applies for vendor assessment to get OEM certification, lists its products or services, and then participates in bids and direct purchase orders.

The process is mostly paperless and relies on API integrations with government databases like PAN, GST, and Udyam for auto-verification — which keeps the timeline short.

Once registered with a valid Udyam number, an MSME unlocks a set of tangible advantages that larger competitors do not get.

These include :

• exemption from payment of tender fees,
• waiver of Earnest Money Deposit (EMD),
• relaxation in prior turnover and experience requirements.

The EMD waiver alone is significant. EMD traditionally blocks anywhere from ₹10,000 to ₹1 lakh in capital upfront, which is money that a micro enterprise simply may not have sitting idle. Removing that requirement directly expands the pool of MSMEs that can bid.

Inclusive Initiatives: SWAYATT, Womaniya, and SC/ST Outreach

GeM has not stopped at structural policy compliance. Several targeted initiatives have been built into the platform to pull in categories of MSMEs that might otherwise remain on the margins.

SWAYATT:

• SWAYATT (Startups, Women, and Youth Advantage Through eTransactions) is an initiative of GeM aimed at creating direct market linkages for:
  • Startups
  • Women entrepreneurs
  • Micro & Small Enterprises (MSEs)
  • Self Help Groups (SHGs)
  • Youth, especially from backward sections of society
• Key points
  • Capacity building through training programs
  • Onboarding support for new sellers
  • Creation of dedicated storefronts to improve visibility among government buyers

Womaniya Initiative (Under SWAYATT)

• Focuses on promoting women-led enterprises
• Showcases products made by:
  • Women entrepreneurs
  • Women SHGs
• Product Categories:
  • Handicrafts
  • Handloom
  • Jute & coir products
  • Bamboo products
  • Organic foods
  • Home décor
• Impact:
  • Women entrepreneurs constitute 8% of total GeM sellers
  • 1,77,786 Udyam-verified women MSEs
  • Achieved ₹46,615 crore cumulative order value

SC/ST Inclusion Impact

• Around 60,000 SC/ST businesses onboarded on GeM
• Initiative has:
  • Expanded market access
  • Generated significant economic opportunities
  • Helped reduce historical entry barriers for these communities

Transparent Payments and Reduced Friction

One persistent problem MSMEs face when dealing with government buyers is delayed payment. GeM addresses this through integration with the TReDS (Trade Receivables Discounting System) financing mechanism.

The platform provides assured compliance with the MSMED Act, 2006 for payments to MSMEs as per the Department of Expenditure Payment Order from the goods acceptance date, with financing available for a period of up to 180 days and automated repayment to financiers through an auto-debit mechanism.

Beyond payment assurance, the portal’s structure eliminates several friction points that used to eat into MSME margins. There are no middlemen. No agent fees. No offline documentation runs.

Product listings are visible to over 1.6 lakh registered government buyers across the country, from central ministries down to gram panchayats. Procurement up to ₹25,000 can be made directly from available vendors on GeM if requirements for quality, specification, and delivery are met, which means small orders flow quickly and without the overhead of a full tender process.

Reducing Cost and Improving Competitiveness

GeM has recently reduced:

• Transaction Charges,
• Vendor Assessment fees,
• Caution Money requirements,

These reductions lower the cost of being on the platform, which matters most to the smallest players. The platform has facilitated cumulative public savings exceeding ₹1,15,000 crore, a figure that reflects competitive pricing rather than price gouging from MSMEs. The reverse auction and demand aggregation tools keep buyers honest and give MSMEs a level playing field against larger suppliers.

The Government e-Marketplace (GeM) has fundamentally transformed public procurement by making it more accessible, transparent, and inclusive for MSMEs. What was once a complex and relationship-driven system is now a digital, process-driven marketplace where businesses of all sizes can compete on equal footing.

By enabling direct access to government buyers, simplifying onboarding, and expanding both product and service categories, GeM has lowered traditional entry barriers. Initiatives like SWAYATT and Womaniya further strengthen this ecosystem by ensuring that women entrepreneurs, startups, and marginalized communities are not just included but actively empowered.

Ultimately, GeM represents a significant step toward building a more inclusive, efficient, and opportunity-driven economic landscape, where MSMEs can seamlessly integrate into government supply chains and contribute meaningfully to the nation’s growth.

The Government e-Marketplace (GeM) has evolved into a critical digital infrastructure that dismantles traditional bureaucratic barriers, allowing MSMEs to participate directly in India’s massive public procurement market. Below are the essential FAQs regarding how GeM empowers small businesses, based on the provided document.

GeM and MSME Procurement: Essential FAQs

1. What is GeM and who can buy from it?

Launched in August 2016, the Government e-Marketplace (GeM) is a 100% government-owned national public procurement portal. It is the mandatory platform for goods and services purchases by:

• Central and State Government ministries and departments.
• Public Sector Undertakings (PSUs) and autonomous institutions.
• Local bodies and gram panchayats.

2. What are the mandatory procurement targets for MSMEs?

The Public Procurement Policy for Micro and Small Enterprises (MSEs) mandates that Central Ministries, Departments, and CPSUs must procure:

• At least 25% of their total annual procurement from MSEs.
• A sub-target of 4% reserved specifically for MSEs owned by SC/ST entrepreneurs.
• A sub-target of 3% reserved for MSEs owned by women entrepreneurs.

3. What special advantages do MSMEs get on the GeM portal?

Once registered with a valid Udyam number, MSMEs unlock several tangible benefits that larger competitors do not receive:

• Exemption from tender fees.
• Waiver of Earnest Money Deposit (EMD), which previously locked up significant working capital.
• Relaxation in prior turnover and experience requirements.
• Direct Purchase: Government buyers can make direct purchases up to ₹25,000 without a full tender process, allowing small orders to flow quickly.

4. How does GeM solve the problem of delayed payments?

GeM addresses payment friction through integration with the TReDS (Trade Receivables Discounting System) financing mechanism. It ensures compliance with the MSMED Act, 2006, by offering:

• Assured payments as per the Department of Expenditure Payment Order from the date of goods acceptance.
• Financing options for up to 180 days.
• Automated repayment to financiers through an auto-debit mechanism.

5. What are the SWAYATT and Womaniya initiatives?

These are targeted programs built into GeM to promote inclusive entrepreneurship:

• SWAYATT: Aimed at creating direct market linkages for startups, women, youth, and Self-Help Groups (SHGs) through training and dedicated storefronts.
• Womaniya: Specifically focuses on women-led enterprises and SHGs, showcasing products like handicrafts, organic foods, and home décor. As of early 2025, women entrepreneurs have achieved a cumulative order value of ₹46,615 crore on the platform.

6. How has GeM reduced the cost of doing business for small sellers?

To keep the platform accessible for the smallest players, GeM has recently reduced several financial barriers:

• Reduced transaction charges and vendor assessment fees.
• Lowered caution money requirements.
• Elimination of middlemen, agent fees, and the need for offline documentation runs.