Government e Marketplace Reduces Transaction Fees to Help Small Businesses
The Government e Marketplace (GeM) has announced a major reduction in transaction charges to make it easier for businesses to operate and to promote inclusivity in the economy. According to the Ministry of Commerce and Industry, the new policy states that all orders valued up to Rs 10 lakh will now attract zero transaction charges, doubling the previous limit of Rs 5 lakh.
For orders between Rs 10 lakh and Rs 10 crore, the transaction fee has been reduced to 0.30% of the total order value, down from the earlier charge of 0.45%. Orders exceeding Rs 10 crore will incur a flat fee of Rs 3 lakh, a significant reduction from the previous cap of Rs 72.5 lakh. With these changes, approximately 97% of all transactions on GeM will now be free from any transaction charges. For the remaining transactions, a nominal fee of 0.30% will apply to orders above Rs 10 lakh, subject to a maximum of Rs 3 lakh, irrespective of order size.
This reduction in transaction fees, ranging from 33% to 96%, is expected to provide a substantial boost to sellers and service providers, particularly benefiting Micro and Small Enterprises (MSEs). By lowering transaction charges, GeM is creating opportunities for small businesses to compete and thrive in public procurement processes.
In addition to supporting smaller enterprises, the policy change aligns with the government’s broader goal of reducing the cost of transactions and fostering a more competitive marketplace. The reduction in fees is a direct response to feedback from the business community and reflects GeM’s commitment to driving innovation and efficiency in the procurement ecosystem.
The financial year 2024-25 is proving to be a milestone for GeM, especially in the services sector, which has seen exponential growth. As of August 31, 2024, the services sector accounted for 65% of the platform’s total Gross Merchandise Value (GMV), amounting to Rs 1.39 lakh crore, surpassing product GMV for the first time. The total GMV for the period stood at Rs 2.15 lakh crore. This surge in services procurement has been bolstered by a vast inventory of 325+ service categories available on the platform. GeM’s user-friendly interface and transparent e-bidding processes have made it easier for government buyers to evaluate, select, and engage service providers.
Doubts Revealed
Government e Marketplace (GeM) -: GeM is an online platform where government departments can buy goods and services. It helps make the buying process easier and more transparent.
transaction charges -: These are fees that businesses have to pay when they sell something through the GeM platform. Lowering these fees helps small businesses save money.
Rs 10 lakh -: Rs 10 lakh is equal to 1 million rupees. It’s a way to measure large amounts of money in India.
Micro and Small Enterprises (MSEs) -: MSEs are small businesses that have fewer employees and lower sales compared to big companies. They are important for the economy because they create jobs and support local communities.
public procurement -: This is when the government buys goods and services from businesses. It can include things like office supplies, construction work, or IT services.
services sector -: This part of the economy includes businesses that provide services rather than goods. Examples are banking, education, and healthcare.
Gross Merchandise Value (GMV) -: GMV is the total value of all goods and services sold through a platform like GeM. It shows how much business is being done on the platform.