Kerala Raises Procurement Limit From Startups, Opens Doors for Non-IT Firms

Kerala raises startup procurement ceiling to Rs 3 crore, extends benefits to non-IT firms. In addition, the ceiling for procurement from startups without tendering has also been increased. Find out more about the new developments.

Swati Dayal
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In a move aimed at strengthening the startup ecosystem in the state, the Kerala government has raised the upper limit on purchases of products and services from startups registered with the Kerala Startup Mission (KSUM) from Rs 1 crore to Rs 3 crore. Furthermore, even the ceiling for procuring from startups without tendering has also been raised.

Also, the benefits of the public procurement policy will now be extended to non-Information Technology startups too.

KSUM, the nodal agency for entrepreneurship development and incubation operations under the state government, has increased the ceiling for public procurement by government departments, public sector undertakings (PSUs), boards, corporations, and local self-government (LSG) institutions from ventures registered under its program. This development is expected to facilitate the adoption of new technological solutions from startups by various government agencies.

Expanding Benefits to Non-IT Startups

The government order issued in this regard states that the benefits previously enjoyed by IT-related startups will now be extended to non-IT enterprises. This means that PSUs, boards, businesses, and LSGs will be able to purchase products and services from non-IT startups registered under KSUM.

Kerala has 49 parent departments and over 1,000 sub-organizations, all of which can now avail products and services from startups registered with KSUM, according to the Government Order.

KSUM Streamlines Procurement Procedures For Startups

In addition to raising the monetary limit for public procurement, the government has also increased the threshold for availing services and products from startups with a unique ID from KSUM, eliminating the need for tender procedures. The limit has been raised from Rs 20 lakh to Rs 50 lakh.

To facilitate this streamlined procurement process, the Stores Purchase department and the Electronics and Information Technology department have issued terms and conditions and guidelines for procuring products and services from both IT and non-IT startups registered with KSUM.

How Is KSUM Promoting Startup Engagement?

To ensure effective engagement between government departments and startups, the government has issued rules to various departments on how to obtain products and services through projects such as the Market Placement Scheme, Demand Day, Demo Day, Direct Procurement, and Innovation Zone.

What Are The Eligibility Criteria and Benefits For Startups?

Under the new order, startups that have completed three years from the date of their registration or three years from the date of product approval by KSUM will be eligible for the benefits of the scheme. Furthermore, any startup that relocates to Kerala can take advantage of the 'Government As a Marketplace' program.

The 'Government as a Marketplace' initiative is the state's flagship project designed to facilitate the purchase of new services and products from startups by government departments.

With these measures, the Kerala government aims to create a conducive environment for startups, promote innovation, and stimulate economic growth. The increased procurement limit and the inclusion of non-IT startups will provide a significant boost to the startup ecosystem in the state, fostering greater collaboration between startups and government agencies.

Kerala has made major strides for facilitating the growth of B2G startups in the state. The Government of Kerala has introduced the first-of-its-kind initiative of providing direct procurement options to Government departments from startups, the first time by any State Government in India. This sprouts from the Kerala State IT Policy 2017 that formalised public procurement from startups.

Kerala is one of the proactive states who have successfully inducted and implemented the Startup direct procurement for Government departments and organizations. This has become rated as one of the best practices in the States Startup Ranking by DPIIT under Public Procurement. Kerala Government has become one of the major early adopters of startup products.