India tells state firms to stop blocking small GeM bidders

India's Finance Ministry is telling government buyers to stop demanding arbitrarily high turnover and payroll requirements in consultancy tenders on the Government e-Marketplace (GeM) portal. In a July 22 office memorandum, the Department of Expenditure said such criteria are shutting out smaller firms without justification.

Procurement agencies need to match minimum staff requirements to what the assignment actually needs, the memo said. Disproportionately high payroll criteria, where they serve no real purpose, restrict competition unnecessarily, the department added.

The warning comes after a sample study of consultancy tenders floated on GeM over the last three financial years. The study found several cases where turnover requirements were set too high, where more weight was given to the consulting firm's overall experience than to the qualifications of the people proposed for the job, and where minimum staff strength was pegged far above what the project required.

"The findings indicate that such eligibility and qualification criteria may unduly restrict competition in the procurement of consultancy services," the Expenditure Department said.

The department has asked ministries and departments to follow the Manual for Procurement of Consultancy Services, Second Edition, 2025, when drafting eligibility rules.

The memo runs counter to the standard practice at many government entities, which default to asking for large teams and big revenue numbers to limit the pool of bidders. A junior consultancy firm with 15 people and ₹2 crore in revenue rarely matches a tender requiring 100 staff and ₹50 crore in turnover, even if the job calls for only five people in the field.

The government runs GeM as its primary platform for buying goods and services. Consultancy contracts on the portal range from legal advice to engineering design to management studies.