Government working to utilise procurement process for promoting startups: DPIIT Secretary

Government procurement means public agencies purchasing products or services from businesses. It covers the process of identifying needs, inviting offers, selecting suppliers and making payments. For startups, access to this market can matter because early customers provide demand while a product is still gaining recognition.

For example, a government department could buy a startup’s technology or service through an approved procurement route. The department would become an initial customer, giving the startup a real operating opportunity rather than only a pitch to investors. DPIIT Secretary Amardeep Singh Bhatia said the government is examining how procurement can provide startups with “early access to demand.”

The opportunity is not automatic. Startups still face difficulty understanding and using available procurement benefits. DPIIT is working with agencies and ministries to address those barriers. A new framework could make government demand easier to find and reach, while private supply-chain partnerships could widen customer access further.

DPIIT is considering changes that would make government procurement more accessible to startups. The aim is not only to create rules, but also to help startups understand available facilities and successfully use them. Officials identified information gaps and difficulties participating in the existing system as major barriers.

The department is working with various ministries and agencies, including Finance, Public Enterprises and MSME. It is also reviewing circulars issued by different agencies and the relaxations already available under the General Financial Rules. These measures are intended to make the route into government procurement easier. Officials want the benefits to be visible and usable, not merely present on paper.

DPIIT Additional Secretary Ateesh Kumar Singh said this work is ongoing and that a new framework will be developed. The broader proposal is to use public purchasing to give startups earlier access to demand. Its success will depend on better communication and startups’ ability to take part in procurement processes.

The General Financial Rules, or GFR, are rules governing how government money is managed and how public bodies make purchases. They help set procedures for spending, tendering and selecting suppliers. In this context, relaxations can reduce standard entry barriers for eligible startups, although the article does not list the specific provisions.

In practice, procurement relaxations may adjust requirements such as previous turnover, prior experience, bid security or performance security. These changes can help a young company compete with established suppliers. However, the article only confirms that certain GFR relaxations already exist. It also mentions circulars from various agencies intended to make government procurement easier.

The remaining problem is practical access. Startups may not know what support exists or may struggle to use it correctly. DPIIT Additional Secretary Ateesh Kumar Singh said the government is working with several ministries and agencies on these issues. A new framework is expected, but its details and timeline are not stated.

India has grown to more than 2.5 lakh startups, according to DPIIT Additional Secretary Ateesh Kumar Singh. More than half of these startups are located in tier-3 and smaller towns. The figure shows both the scale of the country’s startup ecosystem and its geographic spread.

For example, if the total is above 2.5 lakh, the number based in tier-3 and smaller towns is above half of that total. The article does not provide an exact count or percentage, so the precise number cannot be calculated from the stated figures. It does establish that smaller-town startups form the majority of the ecosystem.

This distribution makes access to government demand especially important. Startups outside major cities may benefit from clearer procurement information and simpler participation routes. DPIIT is working with ministries and agencies on a new framework, while the National Startup Awards will also provide recognition and ecosystem support across sectors.

An early government contract could give a startup a dependable customer while it is still building its market. Regular demand may help the company plan production, staffing and service delivery with greater confidence. A public customer can also provide a practical setting in which the startup demonstrates that its product works.

For example, a startup selected by a government department could use the contract to gain operating experience and show future customers that an institution has adopted its solution. The key mechanism is procurement: public agencies create demand by buying products or services. DPIIT Secretary Amardeep Singh Bhatia described this as giving startups “early access to demand.”

The article does not quantify the likely commercial impact or guarantee success. It does show that the National Startup Awards seek to add mentorship, investor engagement, market access, industry partnerships and visibility. Government demand could complement those forms of support, if startups can participate effectively.

Information asymmetry occurs when one side knows more about available opportunities, rules or procedures than the other. In procurement, a startup may not know that a relaxation exists, which agency issued a helpful circular, or what steps are needed to apply. The benefit then exists formally but remains out of reach.

The article identifies two linked problems. First, officials must tell startups what is available. Second, startups must be able to participate and use those benefits. DPIIT Additional Secretary Ateesh Kumar Singh said both parts require attention. A circular can simplify the pathway, for instance, but it cannot help a startup that never finds it or cannot complete the process.

DPIIT is working with Finance, Public Enterprises, MSME and other agencies to address these issues. The planned framework is intended to improve access to existing offerings. Its effectiveness will depend on clear communication and simpler participation, not only on creating additional concessions.

Private companies can help startups grow by becoming customers, distributors, partners or suppliers. When a larger business brings a startup into its supply-chain network, the startup gains a practical route to market. It may also learn how established companies manage quality, delivery and customer needs.

For example, a private firm could source a startup’s product or service for its own operations. That relationship can create recurring business and expose the startup to additional users or business partners. The mechanism is commercial engagement rather than a government tender: a private company integrates the startup into its supply chain and creates demand through its purchases.

DPIIT Secretary Amardeep Singh Bhatia said more private initiatives are needed to engage startups and bring them into supply-chain networks. This support would complement government procurement. The National Startup Awards also seek investor engagement, market access, industry partnerships and enhanced visibility, all of which can help connect startups with private-sector opportunities.