Context

• In India, public procurement amounts to nearly 20-25% of GDP. This means that a significant amount of taxpayers’ money is directed towards making purchases of public goods and services that constitute the lifeblood of government programmes and services. 
• Government e-Marketplace (GeM) was set up in 2016 as a Special Purpose Vehicle under Section 8 of the Companies Act, within the ambit of the Department of Commerce. 
• GeM is a world-class, robust digital portal that facilitates end-to-end  procurement of goods and services by various Central and State Government departments, organisations, and allied public sector undertakings (PSUs). 
• It provides a paperless, cashless, and contactless ecosystem for government buyers to directly purchase products and services from pan-India sellers and service providers through a unified online infrastructure. 
• Since its inception, GeM has enabled more than INR 60,000 crore of public savings. 

Need for a Digital Solution for Public Procurement  

• Government procurement used to be opaque, time-consuming, cumbersome, and prone to corruption and cartelisation. 
• Buyers were forced to purchase substandard goods at high, non-negotiable rates from unscrupulous suppliers. Potential sellers had to run from pillar to post, completely at the mercy of the facilitating agency, to get empaneled and then to get timely payments.  
• The new system was envisioned to replace age-old manual processes that were riddled with inefficiencies and corruption.  

Benefits of GeM  

• Through digitalisation of processes, GeM has led to higher process efficiencies, information sharing, improved transparency, reduced process cycle times, and a higher level of trust among bidders. This, in turn, has resulted in greater competition and higher savings. 
• Its inclusive approach has created an open and diverse public procurement marketplace that provides a level playing field to startups, MSMEs, women entrepreneurs, artisans, and craftsmen, allowing them to participate in government tenders without any barriers, thus ensuring the Ease of Doing Business with the government. 

Growth Trajectory  

• GeM is a category-driven e-marketplace that has a robust listing of more than 11,600 product categories and 300+ service categories. 
• In the first year, GeM recorded a total Gross Merchandise Value (GMV) of ~INR 420 crore. In the following years, transactions conducted through GeM (in terms of order value) grew from around INR 38,000 crore in FY 20-21 to INR 1 lakh crore in  FY 21-22. 
• In FY 22-23, GeM registered an 88% growth, surpassing a milestone of INR 2 lakh crore worth of Gross Merchandise Value (GMV). 

Special Features of GeM

• Trust-based Rating System: GeM provides a rating system that continuously evaluates performance based on weighted and defined parameters. GeM has the provision of rating both the buyers and the sellers, enabling informed decision-making. 
• AL-ML-Based Decision Support: GeM is in the process of implementing AI/ML-based advanced analytics on GeM, which will help GeM reduce anomalies and frauds. These AI-based models will provide real-time or near-real-time feedback on various transactions happening on GeM, and will help a buyer  make informed decisions as well as prevent  anomalous transactions. 
• GeM Sahay: In a bid to address credit access challenges faced by MSMEs and startups, GeM has rolled out GeM Sahay, a mobile application that provides frictionless financing for MSEs and startups, allowing them to obtain a loan at the point of order acceptance on the GeM platform. The platform allows all lenders, duly  regulated by the Reserve Bank of India, to participate and provide loans to GeM sellers. 

Way Forward

• In a short span, GeM’s buyer-seller ecosystem and its operations are twice as large as Amazon India and Flipkart combined. 
• With improved functionalities, the platform is committed to adapting new-age technologies to transform public procurement with an aim to further enhance user experience, improve transparency, and induce greater inclusivity in public procurement process.