Despite the government’s focus on nurturing the start-up ecosystem, getting a government contract continues to be challenge for start-ups. According to industry experts, while the tendering process itself is a difficult nut to crack, it is equally hard to put a price on innovation.
Sangeetha Gupta, Senior Vice-President, Nasscom, said that it is difficult to get a government contract for start-ups due to the government’s tendering process. Governments insist on a minimum security amount for participating in the bidding process. Most start-ups cannot meet the eligibility criterion such as turnover in the previous years as they are new in business.
Gupta pointed out that if start-ups were to be included, the tendering process has to be different. “Some States like Rajasthan and Karnataka are making changes to make the government tendering inclusive for start-ups,” she added.
The Centre has taken steps. It came up with the Start-up Policy in 2016 and has offered tax incentives, seed funding and incubators for the new ventures to grow. Till date, about 1.45 lakh ventures are registered under the Start-up India programme and nearly 170 are funded. They can also now enrol in the Government e-Market (GeM) place, an online government procurement platform. Currently, over 800 start-ups are registered on the platform, according to a report.
Yet, all this does not help the start-up case much.
Sunil Goyal, Managing Director and Fund Manager, YourNest Venture Capital, said that they are yet to see any company it has invested in winning a government contract. One of the companies the VC has invested in, Goyal said, has been listed on GeM for some time.
“They are listed, but if you ask me whether we are getting orders, the answer is no,” he said.
According to an entrepreneur, who does not want to be named, it is a challenge to explain technological innovations involved in their products and processes, even though they are as good as those offered by other competitors.
“GeM is good. But it is still evolving and works well for standardised and commoditised products,” said Gupta. Most start-ups are in software products and services space offering chatbot services that do not figure well on the GeM platform. “More work needs to be done in this space,” she added.
Radha Chauhan, CEO of GeM, in a recent interaction with BusinessLine , said that one of the reasons start-ups are not getting government contracts is because it is hard to put a price on innovation.
To encourage start-ups, the government is now working on a start-up corner on the GeM platform. The products are now being tested by users to determine their usability, get the feedback and determine prices. “In case the product is not innovative, it will be listed along with other products,” she added.