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Government e-Marketplace or GeM Indian government’s version of Amazon.com helps it save $1 billion

Saransh Pandey

  • September 21, 2020
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    The e-marketplace GeM helps ministries and state companies to buy computers, cars, chairs, and millions of other products and services at the lowest possible price

According to a government official, the move of the Indian government to shift a part of its $400 billion public procurement to an online market platform Government e-Marketplace or GeM has resulted in the administration about $1 billion so far. 

The four-year-old government e-marketplace is often referred to as the government’s Amazon.com. Through GeM ministries and state, companies can buy computers, cars, chairs, and millions of other products and services at the lowest possible price by connecting with sellers across the country. Sellers include some of the country’s biggest companies, such as Hindustan Unilever Ltd. (HUL), Maruti Suzuki India Ltd., and Tata Motors Ltd. 

According to Talleen Kumar, GeM’s chief executive officer it’s an addition to the government’s kitty. The money which is collected from GeM by savings in procurement, that money can be utilized by the government for other important purposes and priorities. 

Every year in India, about 18% of the gross domestic product goes on procurement but among these only about a quarter of it can be bought on the e-marketplace. This is because the rest includes highly specialized items such as defense weapons and aircraft. According to Kumar, only about $3.5 billion of the annual procurement is being done through the online marketplace at present, but he believes that it can reach $100 billion in three to five years. 

The federal government’s expenditure on health can be covered with the switch from legacy procurement systems which has the ability to produce annual savings of about $10 billion. At a time, when the government is trying to rationalize its expenditure, the savings could result in a boon to the PM Narendra Modi government. With the government presenting a fiscal package in May to stem the economic fallout of the pandemic has widened the budget deficit to the most in about three decades. 

The marketplace is also being used by the Modi government to keep Chinese companies away from government contracts, especially after tensions between the two countries intensified due to border clashes. For any goods that suppliers sell on GeM, he must note the country of origin, which in turn helps government departments to implement Modi’s “Make in India” policy of self-reliance. 

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