Calls for end to ‘machinated’ tenders
SRINAGAR: The Federation of Chambers of Industries Kashmir (FCIK) has expressed serious concern over the ongoing exclusion and debarment of Micro, Small, and Medium Enterprises (MSMEs) from key developmental projects under the pretext of “works contracts.” The FCIK has urged authorities to prevent departments from issuing tenders that are seen as being deliberately manipulated to the detriment of local MSMEs.
In a statement, FCIK highlighted the persistent exclusion of local MSMEs from major projects like the Revamped Distribution Sector Scheme (RDSS), the Smart City project, and other significant undertakings. This pattern of exclusion, according to FCIK, is now being extended to smaller projects as well.
FCIK cited a specific example involving a tender issued by the Executive Engineer, Flood Spill Channel Division Narbal, under e-NIT No: 09 of 2024-25, dated August 2, 2024, for the “construction of chain link fencing along the bank of Mamath Khul Budgam,” with an estimated cost of Rs 2 crores. FCIK pointed out that the chain link fencing is an industrial product typically manufactured and supplied by MSMEs, and the installation is a service that could be performed by either civil contractors or MSMEs registered for both manufacturing and services through the Udyam Registration Portal.
Traditionally, departments would procure “tested” chain link fencing from MSMEs and later tender out its installation to civil contractors. However, FCIK President Shahid Kamili expressed amazement at the department’s use of the term “construction” in this context, noting that it is usually associated with infrastructure projects like buildings and roads, where the work components are indivisible. Kamili argued that the task of “providing and fixing of chain link fencing” is predominantly a manufacturing activity (80-90%) with a smaller service component (10-20%).
Kamili criticized the department’s classification of this work under “Works Contract,” which typically applies to large-scale composite projects such as the construction of buildings, bridges, highways, and railways. He emphasized that this misclassification is detrimental to MSMEs.
FCIK also referenced a circular from the Ministry of MSME, Government of India, dated January 4, 2023, which clarified that the Udyam Registration Portal allows MSMEs to register for a combination of manufacturing and services activities. The Ministry has further clarified that all economic activities carried out by MSMEs are based on the National Industrial Code (NIC) of 2008, which includes a service component.
FCIK has decided to escalate this issue to the Chief Secretary, urging restrictions on the issuance of manipulated tenders to ensure the revival of marketing support for MSMEs through public procurement. FCIK also hopes that the Principal Secretary of Irrigation and Flood Control and the concerned Chief Engineer will take cognizance of this issue and address it in the best interest of local manufacturers, noting that greater MSME participation would enhance competition and ensure competitive rates and high-quality work.