FCIK raises red flag on MSME Policy noncompliance in Govt tenders

Srinagar, Aug 27: The Federation of Chambers of Industries Kashmir (FCIK) has formally requested the Chief Secretary to address noncompliance with MSME reservation regulations concerning a tender issued by the Department of Irrigation and Flood Control for the "construction of chain link fencing."

In a letter to UT’s Chief Secretary, President Shahid Kamili has raised concerns that, despite multiple requests for clarification and a halt on the tender process, the department has proceeded with bid openings and was expected to award the contract.

While demanding action against the erring officials, he said that the highhandedness on the part of the department raised significant issues about adherence to established policies and the fair opportunity affordable to Micro, Small, and Medium Enterprises (MSMEs).

According to the FCIK release, the tender involved predominantly manufacturing work (over 80%), with a minor component dedicated to service work (less than 20%). Under the Public Procurement Policy and the Ministry’s Circular (F. No. 5/2(6)/2022/E-P&G/Policy(E-4020978) dated January 4, 2023), such tenders are required to be reserved for MSMEs registered on the Udyam portal for both manufacturing and services. The policy has been designed to support MSMEs by ensuring a level playing field and promoting economic fairness and growth.

FCIK has expressed regret that moving forward with the tender after ignoring all communication and without proper MSME reservation could adversely impact the MSME sector, which is vital for economic development and job creation.

The Federation has solicited the intervention of the Chief Secretary to ensure the current tender was modified to comply with MSME reservation regulations. Besides, FCIK has also demanded for a clear guideline to all government, semi-government, and other relevant departments for reserving tenders with significant manufacturing components exclusively for MSMEs. The FCIK has also demanded for the reintroduction of price preferences for local manufacturers to support regional economic balance.

In a separate letter to the Development Commissioner of the Ministry of MSME, FCIK has highlighted a concerning trend of merging industrial goods with "Works Contracts" or "Combined Contracts," which systematically excluded MSMEs from participation.

“Examples such as the tender by the Irrigation and Flood Control department and the Revamped Distribution Sector Scheme (RDSS) executed by Kashmir Power Development Corporation Limited (KPDCL) illustrate how local manufacturers are being sidelined from contracts involving their own products” conveyed the President FCIK in his letter to the DC MSME.

FCIK has urged the Development Commissioner to collaborate with the Chief Secretary to issue clear and actionable guidelines for ensuring the reservation of contracts with divisible components of supply and labour exclusively for local MSMEs.

FCIK has also requested immediate steps to be taken to curb the merging of industrial goods with works contracts that disproportionately disadvantage MSMEs.

The Federation emphasises that without prompt intervention, local industrial units faced significant risks, including potential closure and erosion of confidence in the public procurement system. This would not only harm the local economy but also undermine the broader objectives of economic fairness and growth.