Government e-Marketplace (GeM)

Public procurement system in India

The traditional Indian procurement system was decentralized, cumbersome, time-consuming, and operated on heavily manually driven process(es), leading to an increase in the overall cost of procurement. The complexity is further heightened by varied federal arrangements between multiple agencies, including the State Governments, Central Government, Union Territories, and Local Governments at the village and town levels, each with various product/ service requests. There were attempts to draft a law for public procurement in the form of a Public Procurement Bill in 2012. However, this did not take off. Only after three years, when the Union Finance Minister, Mr. Arun Jaitley, presented the Union budget, did the irregularities and disparities in public procurement return to the light. Given the absence of a particular law for public procurement and other allied financial matters, the Ministry of Finance promulgated the General Financial Rules 2017 (GFR) to govern public procurement (Cowshish, 2021)

The GFR empowers ministries to issue instructions related to procurement policy. For example, the Department of Promotion of Industry and Internal Trade, under Rule 153(iii), issued the preferential treatment of Make in India products. Since the GFR is not only focused on public procurement, modifications are also required to cater to critical sectors like Defense, Railways, Telecom, Public Works Department, and Directorate General of Supplies and Disposal (DGS&D), which issue independent regulations for procurement.

Legal and Regulatory Framework

The framework aims to ensure that the public procurement process ensures procurement of the desired quantity and quality. India’s public procurement framework comprises four elements – constitutional provisions, legislative provisions, administrative guidelines, and overseers. A detailed representation is available inExhibit 1

The constitutional provision authorizes the Central and the State Governments to engage in the contract for goods and services on behalf of the President of India and the Governors of the State, respectively. The legal provisions, though not unified under a single code, comprised an array of legislations, for example, Contract Act 1872, Sales of Goods Act 1930, etc, including various procurement Acts at the State level. The administrative provisions include guidelines for financial management and related procedures in GFR. In addition, the Manual for Procurement of Goods, 2017 (MPG) guides the goods purchase process, and the Delegation of Financial Powers Rules, 1978 (DFPR) empowers various ministries and sub-ministries with financial powers. This provision also contains policies guiding procurement by specific ministries like Defense, Railways, and Public Works Department (PWD). It further includes directives for procurement by the Directorate General of Supplies and Disposals (DGS&D), the central procurement agency supporting the purchasing of various ministries lacking domain expertise. The overseers are comprised of agencies monitoring public procurement in India. The Central Vigilance Commission (CVC) monitors transparency and objectivity in the public procurement process. The Competition Commission of India (CCI) regulates anti-competition practices. At the same time, the Central Bureau of Investigation (CBI) is responsible for administering disciplinary proceedings against criminal activities and elements undertaking such actions. 

E-procurement

As a part of its Good Governance initiative, the Government of India set forth an ambitious objective to adopt digital technologies to achieve Minimum Government and Maximum Governance. In line with this initiative, two Groups of Secretaries recommended a ‘complete revamp’ of the existing public procurement system. The new system was suggested to be market-driven, transparent, and in line with the Digital India Vision of having paperless, cashless, and faceless transactions. (Kumar, 2018; GeM, 2018)

Subsequently, in 2016-17, the then Finance Minister, Mr. Arun Jaitley, announced the proposal to set up a technology-driven platform to support public procurement activities of various Ministries and Government agencies. As a result, on 9th August 2016, with the help of DGS&D, supported by the National eGovernance Division (NeGD) of the Ministry of Electronics and Information Technology(MeITy), GOI launched the GeM portal. It was set up in a record time of five months, providing tools for e-bidding, reverse e-auction, and demand aggregation, allowing the Government to make purchases available at the best market value. It is managed by the GeM Special Purpose Vehicle, a Government-owned Section 8 (Non-profit) Private Limited Company under the Department of Commerce, Government of India. 

GeM is characterized by three core elements – Openness, Fairness, and Inclusiveness. The portal is an open market platform to provide information and access to all users in a transparent manner. All information about sellers, goods/services are made accessible to all concerned. The fairness characteristic of GeM allows sellers, irrespective of their size, to directly access government buyers, which was not previously accessible to smaller sellers. The inclusiveness indicates the platform’s acceptance of all buyers willing to sell to government buyers. The initiative has opened doors to all entities, including notable category establishments like SMEs, women entrepreneurs, startups, weavers, artisans, and tribes, to name a few. 

The key features supported by GeM include buyer/seller registration, catalog management system, order placement and fulfillment, decision support, quality assurance, audit trail, communication and support, dispute resolution and incident management, and data security. 

The GeM ecosystem consists of six key processes for smooth operations: 

1. Buyer-related: It focused on the training and onboarding required for the buyers and the key account management processes.
2. Seller-related: As there are many products and product/service categories offered on GeM, there is a requirement to manage this process. Pricing of the product categories is also a critical process. 
3. Platform-related processes: Focusses on analytics reporting and customer care.
4. Strategy related: Emphasis is on business planning and establishing partnerships and alliances.
5. Technology-related: The focus is on product development and data warehousing.
6. Internal support processes: comprising of internal processes like HR, finance, legal, etc.

Source: Official Presentation on the Journey of GeM

Catalog management system/ Product/Service Category Management: Given GeM’s role as a platform catering to diverse buyers with varying preferences, the catalog management system stands as a cornerstone. This system facilitates a standardized purchasing procedure, fosters a competitive market, and equips buyers with search and comparison capabilities. GeM provides standardized templates for technical parameters of goods/services to ensure objectivity within its offerings. The GeM Catalog Management System (CMS) is structured based on the United Nations Standard Products and Services Code (UNSPS), administered by GS1 US for the UN Development Program (UNDP). However, customization to suit buyers like Railways is in process. 

Contract management: Adhering strictly to the principles of speed, effectiveness, and minimal human intervention, the GeM platform will automatically generate contracts based on the buyer’s defined technical parameters and chosen specifications, encompassing delivery terms and duration.

Incident management: GeM has a comprehensive system for incident management, classifying deviations into three tiers: minor, significant, and critical. Individualized administrative measures will be applied as necessary. Penalties may vary from recording deviations against the seller/buyer to suspending or blocking the defaulting party’s account. In severe cases, a recommendation for blacklisting to the Board/Ministry of Commerce may be proposed.

E-Procurement

Direct purchase: The direct purchasing method is suited for transactions below Rs 25,000. It permits the purchaser to procure directly from any seller on GeM who fulfills the buyer’s specified quality, specifications, and delivery timeframe.

L1 Buy: This mode is permissible for transactions above Rs. 25,000 and below Rs. 5,00,000. It enables the buyer to procure directly from the L1 seller after comparing all platform-available sellers that meet the buyer’s specified quality, specifications, and delivery period. This comparison necessitates assessing goods/services from a minimum of three distinct manufacturers/OEMs and three different sellers.

Push button procurement: The mode is applicable for bid values of less than Rs 1,00,000, with at least five bids being received. Any requests with less than five bids will follow the other procurement processes. 

Bids/reverse auctions: This mode lets buyers electronically bid for goods and services on the platform. Bid document creation and system-driven evaluations will adhere to clear, standardized technical parameters and bid terms and conditions.

Proprietary Article Certificate (PAC) Buying: It allows buyers to buy specific products from the catalog as per requirements. The direct purchase and bidding/RA buying modes will be permitted as per thresholds. 

Forward Auctions: The GeM buyers are automatically registered as forward auctioneers, allowing pan-India auctions of goods/immovable items and materials. 

Custom Bidding: Only if products are unavailable on the GeM platform.

Bill of Quantities (BoQs) based bidding: The mode is applicable when the buyer wishes to procure a large list of items. The sellers quote a price for each sub-item in the list. 

Demand Aggregation: GeM facilitates the consolidation of product demand from various purchasing centers. For instance, numerous states and central authorities can collectively request a specific product or service through a unified bid. This approach often leads to more competitive pricing due to the significant order volume from a single seller, enabling economies of scale. Despite the centralized bid, individual and multiple agencies on GeM can allocate orders, invoices, and subsequent payments.

GeM offers buyers and sellers personalized for comprehensive tracking of overall transactions and performance. Reports on transaction summary, payment due, and non-adherence of payment/delivery SLAs are also made available. Further, the buyers can also align their procurement with directives like the Make in India and MSME policy. This data will also support policymakers from various departments like MSME and DIPP in policy formulation. Further, GeM maintains an audit trail of all transactions to allow transparency in the process and allow auditors to evaluate the choice of filters, data, evaluation criteria, and confidentiality techniques used on the platform. This helps to ensure that fair practice mechanisms are in place. 

The platform embraces AI-ML tools to support buyers with price discovery so that the buying institution can find a seller offering the best price for a given product/service at the given time. It helps identify any anomaly in any transactions and intervene to avoid or flag such instances. Several advanced analytics modules are being implemented for – market intelligence, tracking product similarity, analyzing price gaps, detecting real-time anomalies, and checking the health of a bid (bidding analytics). Augmented Reality is also in the development process, whereby buyers can scan QR codes through their mobile devices and view 3D models of the desired product. 

Learning Management

The learning management system allows users and trainers to learn the intricacies of processes like registration and live training using webinars, certification, feedback, FAQs, and other user-specific journeys. Further central and regional training support mechanisms are set up to onboard users remotely. 

Support Functions 

Training: GeM trainers from each state tie up with the MSME/DIC offices and impart training to sellers. MoUs are signed with trade and manufacturing associations. GeM participated in all conferences organized by these associations. The remote locations are captured through the Common Service Centres. The Village Level Entrepreneurs at these centers have the infrastructure and access to software applications that help them onboard sellers without compromising their privacy. The VLE can help any seller in any remote location with limited access to the GeM portal. GeM will pay the registration charges to the VLE for seller registration. GeM has tied up with ministries like the Ministry of Tribal Affairs and Ministry of Rural Development to onboard marginalized sellers like weavers, artisans, women entrepreneurs, etc, who can sell rare traditional artifacts never brought to the larger market for sale.

Helpdesk: To facilitate the users across the user journey, support centers are located in Delhi and Bhopal with 200 well-trained executives. The helpdesk answers queries, helps in troubleshooting, and offers technical and developmental assistance. The users can avail of the facility through multiple channels – calls, websites, Email, chats, WhatsApp, and walk-ins. For high-net-worth buyers, preferential services are offered.

Payments

The payments via GeM are paperless and use multiple online modes to enhance users’ convenience and improve transparency. GeM also integrates across various payment systems suited to users. For example, the Public Financial Management System, State GeM Pool Account, Controller General of Defense Accounts, Centre for Railway Information Systems, and Central Reserve Police Force Payment System. It also facilitates integration with buyers’ ERP systems. The policy stipulates that buyers make the payments within ten days of the generation of the Consignee Receipt and Acceptance Certificate. Failure to do so will lead to deductions as per the contract and a possibility to collect interest on delayed payments. 

The Indian Government has implemented GeM through multiple stages to facilitate its acceptance and utility among stakeholders. The journey began with the identification of the idea of one such unified portal, to develop a pilot version to ensure its effectiveness to rolling out the full-fledged platform embracing a total of ‘66,000 government buyer organizations and more than 58 lakh sellers and service providers offering a diverse range of goods and services (ET, February 2023).

The Idea

The origin of GeM was an online marketplace for public procurement, a Government-to-Business platform (G2B) given the inefficiencies in the public procurement system fueled by complex manually driven procurement system, lack of transparency, and through the inclusion of various business segments, especially the SMEs and micro enterprises, the Prime Minister of India, Shri. Narendra Modi, in 2016, constituted committees of secretaries to brainstorm and provide suggestions on how to transform the governance of various sectors. As a part of this process, three different committees suggested transforming public procurement and digitizing it in line with e-commerce giants like Amazon and Flipkart. The idea was accepted, and DGS&D was tasked to present the proof of concept in three months. DGS&D, with their expertise in public procurement, and NeGD, experts in the technical aspects of the e-governance domain, developed the proof of concept (PoC). The PoC experimented with two product categories and one service category while simultaneously incorporating the rules and regulations governed by the GFR, the MSME policy, and the border-sharing regulations for land. In June 2016, this PoC was presented to the cabinet secretary and the Prime Minister. The idea was well accepted, and it was subsequently mandated that all public procurement by government agencies and departments be conducted through this GeM portal.

The portal was further developed based on learnings from similar G2B platforms in other countries, in particular, Chile’s “Chile Compra,” South Korea’s “KONEPS,” and Singapore’s “GeBiz.” The Indian Government linked up with the procurement agencies of these three countries (and the World Bank) to obtain information on their pricing data for the platform. They defined five dimensions for which they defined best practices from around the world: buyer and seller management, platform features, policy and management, revenue, and operations model. Once they had identified the best practices in the global G2B arena, they defined their implications for GeM and strategized how to implement GeM in line with them.

The Pilot Version

The Indian Government also rolled out an extensive pilot version to test the platform before it went online. After the Finance Ministry announced the development of the GeM, the pilot was rolled out in July 2016, with the Department of IT preparing the platform interface before the main site went online in January 2017. The GeM was rolled out in two phases. In the first phase, only two general product categories used widely by various Government Departments and Organizations were part of GeM: Computers and Vehicle management (e.g., Taxi) services. [7] During the pilot, it was free of charge for sellers to advertise their products/services on GeM.

After the pilot period of six months, in January 2017, the software developers added more functionality to the website by including more product categories, allowing more sellers to advertise their products and creating a mechanism that informs sellers about the reasons for losing a bid. Sellers can advertise their products free of charge on GeM; only a small vendor registration fee is necessary.

Full-fledged Platform

The GeM platform was launched as an end-to-end online marketplace to facilitate online procurement of common goods and services required by central and state government ministries, departments, public sector undertakings, autonomous institutions, organizations, and local bodies to procure goods and services at the right price, right quality, and quantity transparently and efficiently. The GeM hopes to establish itself as a full-fledged platform based on the number of sellers, service providers, and buyers signing up and shifting their transactions over to it over time. To facilitate GeM, the Indian Government amended the General Financial Rules (GFR) and changed procurement directives. As per this change, all the Central Government organizations and departments were required to procure from GeM. The platform experienced remarkable acceptance within the first three years of its implementation, with about 290,000 sellers and service providers signing up for it. GeM facilitated the sales of more than 1,400,000 products to more than 39,000 buyer organizations across Central and State Government Ministries, Departments, and their affiliates. As of February 2023, the GeM statistics (exhibit 4) are highly encouraging.

GeM has signed MoUs with almost all the state governments. The integration of other available public procurement platforms with GeM is also underway. Though all processes of these platforms may not be feasible to integrate, the best practices that align with the three founding principles of GeM will be integrated. In the future, this could lead to a unified procurement portal for public procurement. Deep integration will require integrating the systems at various stages of procurement. We plan to implement this in the future.

Currently, GeM is using the data sharing model where data on the ERPs/other platforms are shared with GeM and vice versa. Open APIs are being developed to facilitate integration.

In the words of Mr. Pankaj, CTO of GeM, “The API integration will help ensure end-to-end supply chain connection. The integrations help seamless interactions across the value chain. APIs further help buyers to initiate payments easily from the related government payment authorities like PFMS. This ensures quick and simple transactions. Further integration with UDAI and GST helps validate the seller credentials during the registration process in GeM.”

GeM supports sellers by providing access to working capital finance by partnering with various financial institutions. GeM Sahay is one such initiative where the sellers can avail of collateral-free working capital loans to fulfill the order’s requirements.

The present size and scale of the GeM operations

Though GeM is set up as a Section 8 not-for-profit company, it needs to nurture and develop a meaningful revenue model to realize revenues and sustain its operations. The primary cost elements include payout to the managed service provider, personnel cost, marketing expenses (expenses incurred to increase awareness and engagement with the platform), general and admin expenses, funds for growth and innovation, and costs to cover any exigencies.

The potential revenue streams for the portal considered included:

Flow from one-time fees like registration/listing fees.

Recurring revenues like annual fees, transaction fees, advertising income, fees from value-added services, etc.

The above led to the creation of a framework for GeM, which was implemented as a two-fold revenue generation model for GeM over a period:

1. The transaction fee model will be the primary revenue generation and cost recovery model. Under this model, the buyers and sellers will be charged a nominal transaction fee for operating on GeM, with sellers being charged slightly higher because of GeM’s access to Government buyers. The percentage could be based on the margin the seller earns, with higher margin categories attracting higher fees than the lower margin categories.
2. Behavior-based incentive model, which will incentivize/disincentivize user behavior in line with GeM objectives. One-time fees like registration fees will curtail sellers from creating multiple accounts and remain accountable to the single account they make on the portal. Similarly, a small listing fee will restrain sellers from listing unnecessary new products. For example, some of the incentives offered are for accurate product uploads, where every ten accurate listings will allow the seller to list an additional five products without a listing fee.

Founding principles of GeM – Transparency, Efficiency, and Inclusivity

The backbone of GeM comprises the elements of transparency, efficiency, and inclusivity. Before implementation, any new processes/features or modifications are measured against these parameters. It will be incorporated only if the feature/process contributes to the enhancement of these elements.

Transparency

The absence of human intervention in vendor registration, order placement, and payment processes brings in the power of technology to avoid human intervention and, thus, any bias/favoritism. Integrating the platform with the Public Financial Management System (PFMS) and State Bank Multi Option System (SBMOPS) ensures online, cashless, and, most importantly, time-bound payments. The Department of Expenditure has mandated online time-bound payments, which has heightened the confidence levels of vendors as this will drive the administrative costs involved in previously following up with agencies for payments.

The perception of delayed payments by government agencies was a strong deterrent to inclusion in the past system. A new initiative by the Department of Expenditure allayed this fear. The buyers were instructed to make the payments to sellers within ten days, failing which auto trigger to payment will be raised. In instances where auto payment is not feasible, the buyer will be automatically charged interest on delayed payments, which is visible on the dashboard. It is important to note that interest payments are considered a black mark in a government department as it attracts undue attention during audit reviews and ultimately affect the department’s performance. Further, this penal interest is not transferred to the seller to add to this benefit. It is utilized for enhancing seller support services.

Efficiency

Direct procurements on GeM can be completed within minutes. There is a substantial time saving for higher value bids/ reverse auctions as buyers no longer need to draft all the technical specifications, as these are pre-existing in GeM. The bid is instantly created and finalized within seven days. All the eligible suppliers are notified via SMS immediately about the bid. This ensures fairness, transparency, competition, and efficiency.

If any seller fails to comply to guidelines, GEM is the only platform where the action against such sellers is swift and automated. If the seller fails to deliver the product on time, an automated notification is sent seeking clarification. If the seller fails to respond to this notification, a show cause notice is issued. A failure at this stage will lead to the seller’s suspension from GEM. If the seller is blacklisted, then they will not be able to sell any product on the platform. If the seller responds to the notifications, the GeM team takes corrective actions accordingly. In other platforms, if a seller defaults, they register as a new entity and continue offering products. In GeM, the advanced incident management system blocks such instances.

As per an official at GeM, “Even if a seller is debarred for a week, the repercussions are so high that they may lose all chances to participate in all bids during that week. This can lead to losses of a few crores to the seller. Hence, sellers are very careful in their interactions and try to ensure the buyer does not raise an incident against the seller.”

Further, GeM is setting up automated flagging of non-compliance at every procurement stage. If the sellers willfully proceed through the process, ignoring the compliance warnings, the process halts the procurement, and action is taken. This mechanism also supports sellers unaware of the rules and guides them to comply with them, thus avoiding any hassles and incontinence to sellers at later stages of procurement.

Data and Security

The security in GeM has been provided at all levels as the buyers and sellers e-sign documents at various stages. Further supplier due diligence is conducted by empaneled agencies by the Securities Exchange Board of India (SEBI). There is a 100% check on all vendors on GeM. With the advent of artificial intelligence and machine learning, GeM can use the large volume of data collected to design decision support systems for buyers and sellers. The AI-ML interface will be trained to flag any attempts of wrong-doings by the sellers and trigger such flags. This will tremendously help track audit trails and maintain transparency throughout the process. The system will also support rating buyers and sellers based on various parameters. In the future, filters could be provided where the sellers could filter top-rated buyers and vice versa.

Savings

Compared to traditional procurement practices, the efficiency and transparency of GeM lead to incredible savings. The average prices on GeM are 15-20% and, in some instances, 56% cheaper than the market (India.gov.in website). The Demand aggregation has resulted in over Rs 40,000 crore in annual savings.

Inclusion

Inclusion is one of the most critical aspects of the founding principles of GeM.

According to Shri. Prakash Mirani, Additional CEO of GeM: “Market access to the underprivileged is integral to inclusivity. By registering on the GeM platform, any seller can access a rupees three lakh crore market, even in the country’s remotest location. All market information, the prices, the bids, etc, are accessible to all registered sellers. Every bid or requirement placed on the portal is instantly notified to all registered sellers of that category. Asymmetry of information is completely removed through this process. Thus, the sellers, who were once never able to access the government market, can easily interact with the government buyers. This brings in transparency and inclusivity.”

To overcome the challenges of digital illiteracy, the GeM team adopted a multipronged approach.

A team of trainers who interacted with the local MSME offices and District Industry Centers (DICs) proactively engaged in their activities/events/meetings and offered training on GeM to several entrepreneurs. They were assigned to each state.

GeM engaged with multiple trade and manufacturing organizations and signed MoUs with them, as a result of which GeM partnered with them in all the conferences and events organized by these organizations. These interactions allowed GeM to train and register several sellers on the portal.

GeM partnered with Common Service Centers (CSCs) and the Indian Postal Department by signing MoUs. The initiative helped GeM penetrate remote locations in the country. The Village Level Entrepreneurs (VLEs) at the CSCs were found to be instrumental in promoting digital literacy and onboarding several sellers. In order to maintain the confidentiality of the sellers’ information, a separate workflow was created so that the VLEs could register the seller without having the seller divulge confidential information. The new workflow ensured information security, thus building trust among the sellers. The VLEs help onboard sellers without access to GeM or its training. The registration charges are paid to the VLE by GeM.

At present, GeM has eight outlets specifically targeted to special communities like tribal communities, women entrepreneurs, artisans, physically disabled, etc, who could never access this huge market. To capture these segments, GeM has interacted with the Ministry of Tribal Affairs/ Rural Development to gain access to their database. GeM has connected with all the individuals in the databases and has successfully onboarded several sellers from these marginalized communities.

Any buyer can buy any product up to Rs. 25,000 without any complex formalities from these sellers. For example, government offices can buy traditional artifacts/paintings for office purposes from these sellers without restrictions. This allows buyers to access genuine traditional products from the source while providing livelihood opportunities for these artisans from marginalized communities.

Economic outcome

Gross Merchandise Value (GMV) is a metric to measure the total value of merchandise sold by an outlet for a given period. Fig 3 shows that the GMV for GeM has been growing rapidly to cross the Rs 2 Lac crore mark in just over five years since inception.

The additional performance measures of GeM are presented in Tables 1, 2, and 3.

Table 1: GeM Key Statistics in FY 2023

Table 2: GeM Performance in FY 2023

*Portal crossed ~1 trillion in GMV in FY23

*Cumulatively, it has logged over ~3 trillion in GMV since inception

*GeM’s revised GMV target for FY23: ~2 trillion (about $25 billion at current exchange rate)

Table 3: GeM Year-on-Year Order Value 

Leveraging the technology, process digitization, comprehensive digital integration of stakeholders, and the strategic application of analytics, GeM has orchestrated a revolutionary transformation within the public procurement ecosystem in the country, benefitting both buyers and sellers. The transformation has yielded notable benefits, including heightened operational efficiencies, improved information dissemination, enhanced transparency, reduced process cycle times, and cultivated stakeholder trust.

Buyers

The transformation brought about by GeM platform has benefited buyers in multiple ways. The buyers now have an option to choose from a widened array of products and services than in the past. The enhanced ease of access provided by GeM allows several sellers to register and compete and offer quality products at reasonable prices. Further, digitization of process has buyers gain access to sufficient information on products/services, seller ratings driven by reviews of previous buyers which enable buyers to take informed decisions. The buyer confidence in GeM is seen from the growth of registered buyer organizations, which nearly doubled from 35,291 in 2019 to 67,726 in 2023.

Further, results from an independent survey reveal that over 65% of buyers have transitioned to GeM for procurement in the last three to four years (refer exhibit 3), with around 60% solely using GeM for procurement (refer exhibit 6). A perception analysis combined with sentiment analysis revealed that over 70 percent of the buyers using GeM have reported an ease in using the platform, conducting transactions and making payments while experiencing shorter procurement cycle time. The buyers suggested that a simplification in the registration and the onboarding process would smoothen the initial teething concerns. An overall understanding from the survey reflects a positive sentiment buyers have towards GeM in areas of transparency, access to larger seller pool and the cost savings resulting from demand aggregation.

Sellers

One of the founding principles of GeM is inclusivity. While the focus on inclusiveness is maintained, additional benefits of transparency, quick turnaround time and responsive payments systems have made GeM a preferred platform for a large number of sellers. The acceptance is witnessed in the growth in the number of registered sellers from 206,403 registered sellers in FY 2019 to 60,05,467 registered sellers in FY 2023 (refer exhibit 8). As per an independent survey the satisfaction

GeM has focused on onboarding marginalized seller segments like small and medium enterprises, women entrepreneurs, startups, and artisans. Aligning with the Make in India movement, GeM has made strides to ensure preferential treatment to micro small and medium enterprises (MSME’s).

The outcomes

• Out of the registered MSEs over 8.5 lakh MSEs have received orders valued at more than Rs 2 Lakh crores.
• In collaboration with Self-employed Women’s Association [SEWA], GeM has enabled training for more than 21 lakh women driven MSEs and self-help groups, ensuring ease of access and onboarding GeM.
• Over 1.38 Lakh registered women led MSE have fulfilled 6.29 lakh orders worth Rs 12, 692 crores.
• More than 13,000 registered start-ups have recorded completion of orders worth Rs 14,000 crore in terms of Gross Merchandise Value.
• 149,429 weavers were onboarded as on 2023

To summarize, Fig represents the overall impact that GeM portal has achieved with respect to cost savings, efficiency, inclusiveness and transparency.

The incredible growth of GeM over the last six years has brought it closer to the private e-commerce giants such as Amazon India and Flipkart. The greater opportunities in front of GeM are to establish itself as the largest e-commerce platform in India and make its services available beyond government buyers and departments. The GeM platform has taken many steps to onboard products of self-help groups, tribal communities, artisans, weavers, and MSMEs.  

GeM has led to a technology-based Indian procurement system, transforming procurement processes into paperless, cashless, and faceless transactions not hindered by individuals or vested interests. It has proved itself to be reliable – both to sellers and buyers. As per the economic survey 2023, GeM is quickly catching up with mainstream corporate e-commerce platforms such as Amazon and Flipkart in terms of volumes and value of transactions. It also supports small businesses in growing faster. The platform’s success is clearly visible in the Gross Merchandise Value and Average order value given in exhibits 5 and 6. Embracing advanced technologies like Augmented Reality, GeM is partnering with TagBin to create QR codes for over 300 products in its pilot phase. This initiative will facilitate buyers scanning the QR code and viewing 3D models of the products over their mobile phones. 

Further artificial intelligence and advanced analytics are being planned to enhance the efficiency and inclusiveness of GeM. Some of the key areas of AI implementation will include (1) Fraud, anomaly detection and market sanity (2) Procurement planning, forecasting, and monitoring (3) Intelligent virtual assistant aimed at enhancing the buyer/seller procurement journey (4) Automatic tagging and description for catalog management and (5) Automation of customer service channels.  These initiatives will ease the search process for buyers by providing the right products at the right price. Enhance the ease of using and navigating through the contents of the portal. The analytics modules will also help trace, detect, and track any anomaly during the procurement process, thus ensuring transparency.  

The future of GeM is driven by the aim of developing a universal public procurement portal where all forms of government procurement are conducted through a single platform. Secondly, it aims to enhance inclusivity by permeating the presence and use of GeM at grassroots levels across the country to the levels of village panchayats. Thirdly, value-added services like advanced data analytics and Fintech services were added to its basket of offerings. These goals are planned to be achieved by first enhancing the trust among existing users, leading to them becoming advocates for GeM. The team aims to revamp and advance the current state of operations like customer service and incident management to scale up to the rising demand and use of the portal and set up an independent risk and fraud control unit accordingly.  

​​​Going ahead, GeM must make certain tough calls that will direct its business’s orientation, technology, and scope. The decisions are: 

1. Should GeM continue focusing on the public procurement system only? What are the process and technology upgrades required to enhance the buyer/seller experience with the platform? 

2. Should GeM diversify as a unified e-commerce platform catering to rural India? How will it create and sustain competitive advantage in a competitive landscape?  

3. How will GeM address the intricate supply chain issues arising from the scaling-up of the platform? 

Exhibit 1: Indian Public Procurement Framework

Exhibit 2: Evolution of GeM

Exhibit 3: Buyers transition to GeM

Exhibit 4: Growth in buyer organizations

Exhibit 5: Buyer’s use of procurement channels

Exhibit 6: Average order value of buyers

Exhibit 7a: Perception analysis

Exhibit 7b: Sentiment Analysis

Exhibit 8: Growth in Registered Sellers