Gujarat HC reserves order on must sourcing from MSMEs

The Gujarat High Court on Wednesday reserved its order in a case about compulsory procurement of certain goods from Micro, Small and Medium Enterprises.

According to the petition, despite guidelines to source some materials from small businesses, the AMC had awarded contracts to companies in Uttar Pradesh and Haryana without following due process. The bench will pass its judgment on March 5, 2018.

According to a state policy, government authorities must source certain materials from local MSMEs. The government list comprises 188 items that must be procured from local businesses. However, the civic body had recently procured certain items that are on the list from companies outside the state.

During the hearing, the petitioner claimed that the state government had issued a notification to the effect, identifying the items that must be procured from local MSMEs. Local authorities need to float tenders inviting MSMEs to bid for the contract. Under special circumstances, authorities can seek exemption but they have to get permission from the State Purchase Committee. However, according to the petition, the AMC did not seek any such permission before awarding the contract to the out-of-state companies.

It must be noted that small industries have raised the issue before where they have said that government authorities were not procuring goods from local businesses even though the state had announced a policy making it mandatory. Small businesses have been advocating strict implementation of the procurement policy for a while.