‘Tender ignores MSME reservation rules, harms local industrial units, economy’

SRINAGAR: The Federation of Chambers of Industries Kashmir (FCIK) has requested action from the Chief Secretary of Jammu and Kashmir regarding a tender issued by the Department of Irrigation and Flood Control for the “construction of chain link fencing”, which allegedly violated MSME reservation regulations.
In a letter to the Chief Secretary, FCIK President Shahid Kamili expressed concerns that the department proceeded with bid openings and was expected to award the contract despite multiple requests for clarification and a halt on the tender process. Kamili called for action against the officials responsible, highlighting the importance of adhering to established policies and ensuring fair opportunities for Micro, Small, and Medium Enterprises (MSMEs).
According to FCIK, the tender involved predominantly manufacturing work (over 80%) with a minor service component (less than 20%). As per the Public Procurement Policy and the Ministry’s Circular (dated January 4, 2023), such tenders should be reserved for MSMEs registered on the Udyam portal for both manufacturing and services. This policy aims to support MSMEs by ensuring a level playing field and promoting economic fairness and growth.
FCIK expressed regret that moving forward with the tender without proper MSME reservation could negatively impact the MSME sector, which is crucial for economic development and job creation. The federation has urged the Chief Secretary to ensure that the current tender complies with MSME reservation regulations and requested clear guidelines for all government, semi-government, and other relevant departments to reserve tenders with significant manufacturing components exclusively for MSMEs. Additionally, FCIK has called 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 highlighted a trend of merging industrial goods with “Works Contracts” or “Combined Contracts,” which systematically excludes MSMEs from participation. The President of FCIK cited 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), illustrating how local manufacturers are being sidelined from contracts involving their own products.
FCIK has urged the Development Commissioner to collaborate with the Chief Secretary to issue clear and actionable guidelines to ensure the reservation of contracts with divisible components of supply and labor exclusively for local MSMEs. The federation has also called for immediate steps to prevent the merging of industrial goods with works contracts that disproportionately disadvantage MSMEs.
The FCIK emphasizes that without prompt intervention, local industrial units face significant risks, including potential closure and loss 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.

KR Desk