GeM Slashes Transaction Fees to Boost Small Businesses and Inclusivity

The Government e Marketplace (GeM) has significantly reduced transaction charges to facilitate ease of business and inclusivity. Orders up to Rs 10 lakh will have zero charges, with reduced fees for higher orders. This initiative aims to particularly aid Micro and Small Enterprises (MSEs).

In a landmark move to enhance the ease of doing business and promote economic inclusivity, the Government e Marketplace (GeM) has slashed transaction charges for sellers and service providers. Under the new policy, announced by the Ministry of Commerce and Industry, all orders valued up to Rs 10 lakh will now attract zero transaction charges, a doubling of the previous ceiling of Rs 5 lakh.

For orders between Rs 10 lakh and Rs 10 crore, the transaction fee has been lowered to 0.30 per cent of the total order value, down from the previous 0.45 per cent. Orders exceeding Rs 10 crore will incur a flat fee of Rs 3 lakh, a substantial reduction from the earlier cap of Rs 72.5 lakh. These revisions mean that approximately 97 per cent of all transactions on GeM will now be free from any transaction charges.

For the remaining transactions, a nominal fee of 0.30 per cent will apply to orders above Rs 10 lakh, capped at Rs 3 lakh regardless of the order size. This significant reduction in fees, ranging from 33 per cent to 96 per cent, is set to provide a considerable boost to sellers and service providers, enhancing their competitiveness.

This strategic shift is expected to democratise access to the public procurement system, benefiting particularly Micro and Small Enterprises (MSEs) that have historically faced financial and operational hurdles. By lowering transaction costs, GeM is levelling the playing field, offering small businesses the opportunity to compete and thrive in public procurement processes.

Aside from supporting smaller enterprises, this policy change aligns with the government's broader objective of reducing transaction costs and fostering a competitive marketplace. The fee reduction is a direct response to feedback from the business community and underscores GeM's dedication to fostering innovation and efficiency within the procurement ecosystem.

The financial year 2024-25 is turning out to be a milestone for GeM, particularly in the services sector, which has experienced exponential growth. As of August 31, 2024, the services sector accounted for 65 per cent of the platform's total Gross Merchandise Value (GMV), amounting to Rs 1.39 lakh crore, surpassing product GMV for the first time. The total GMV for the period stood at Rs 2.15 lakh crore. This surge in services procurement has been strengthened by a comprehensive inventory of 325+ service categories available on the platform. GeM's user-friendly interface and transparent e-bidding processes have made it easier for government buyers to evaluate, select, and engage service providers.

(With inputs from agencies.)