Govt Ten­ders Still Out of Reach for Star­tups

Young com­pa­nies are chal­lenged by tough el­i­gi­bil­ity cri­te­ria that of­ten dis­qual­ify them from gov­ern­ment projects

The Economic Times - - Companies: Pursuit Of Profit - Taslima.Khan @times­group.com

New Delhi: Mo­han Chan­drasekaran’s two-year-old firm AdStringO man­aged to se­cure the cov­eted gov­ern­ment-ap­proved startup cer­ti­fi­ca­tion but that hasn’t helped smoothen its path to gov­ern­ment con­tracts. Chan­drasekaran has been keen for his im­age com­pres­sion soft­ware firm to se­cure busi­ness from gov­ern­ment projects such as the Na­tional Sav­ings Cer­tifi­cates scheme and en­ti­ties such as the Na­tional Se­cu­ri­ties De­pos­i­tory Ltd.

But the el­i­gi­bil­ity cri­te­ria for par­tic­i­pat­ing in gov­ern­ment projects prove to be bar­ri­ers too big for the likes of AdStringO, a startup that counts Tata Group, HDFC Bank and ICICI Bank among clients. “Much more than fund­ing, star­tups need busi­ness to sur­vive,” said Chan­drasekaran, CEO of AdStringO. “The prime min­is­ter’s prom­ise un­der Startup In­dia was that if your prod­uct and pric­ing are good, you can qual­ify (for gov­ern­ment ten­ders). A cou­ple of times, our pro­pos­als got re­jected be­cause they were nec­es­sar­ily look­ing for (com­pa­nies with) .₹ 5,00010,000 crore turnover and prof­itabil­ity for three years.”

Among the chief at­trac­tions of Startup In­dia ini­tia­tive has been its prom­ise to al­low se­lected com­pa­nies bet­ter ac­cess to pub­lic sec­tor projects with eas­ier pro­cure­ment norms. “In or­der to pro­mote star­tups, gov­ern­ment shall ex­empt star­tups (in man­u­fac­tur­ing sec­tor) from the cri­te­ria of ‘prior expe- ri­ence/turnover’ with­out any re­lax­ation in qual­ity stan­dards or tech­ni­cal pa­ram­e­ters,” states a pol­icy doc­u­ment on Startup In­dia site.

That prom­ise, say star­tups, hasn’t held true. Gov­ern­ment projects mostly are awarded to large com­pa­nies de­spite young tech­nol­ogy star­tups of­fer­ing com­pet­i­tively priced prod­ucts.

Get­ting se­lected for Startup In­dia it­self has been a chal­lenge be­cause of its tough el­i­gi­bil­ity norms, ET re­ported on Fe­bru­ary 1. In the 12 months since the ini­tia­tive was launched, in Jan­uary 2016, only 522 out of about 1,425 ap­pli­cants have been se­lected.

Satyabrata Das, deputy gen­eral man­ager-fi­nance at sta­te­owned power util­ity NTPC Ltd, said star­tups can­not be cut any slack and would have to ful­fill all the qual­i­fy­ing cri­te­ria to bid for a project. “For an or­der value of .₹ 50 lakh, we could re­quire them to have ex­pe­ri­ence of hav­ing had prior sales of up to .₹ 50 lakh. And for ten­der val­ues up­wards of .₹ 50 lakh, star­tups will have to sub­mit their bank state­ments,” he said.

That would ex­plain why Phoe- nix Robotix, a gov­ern­ment-cer­ti­fied startup that has built a low­cost pol­lu­tion mon­i­tor­ing de­vice and holds three patents, has had to part­ner with larger com­pa­nies for Smart City projects.

“Most (pub­lic sec­tor un­der­tak­ings) we are talk­ing to are showing in­ter­est in our prod­uct but it is dif­fi­cult to go through the ten­der­ing process since we won’t be el­i­gi­ble,” said CEO Amiya Ku­mar Sa­man­taray. The qual­i­fy­ing cri­te­ria re­quired the bid­ding com­pany’s turnover to be at least dou­ble the ten­der value and for it to have ex­pe­ri­ence of at least three years in sell­ing the spe­cific prod­uct, he said.

An­other big hur­dle, ac­cord­ing to star­tups, is that gov­ern­ment de­part­ments and pub­lic com­pa­nies are un­aware of which firms qual­ify un­der Startup In­dia to bid for their projects. NTPC’s Das said the com­pany’s ven­dor list runs into the thou­sands and it was not pos­si­ble to seek out star­tups for their re­quire­ments. Also, it is up to gov­ern­ment-cer­ti­fied star­tups to ap­proach the com­pany and reg­is­ter with it as a ven­dor, he said.

ANIRBAN BORA

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