Composite Contracts: FCIK regrets ‘exclusion of MSMEs’

15 August 2024

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Srinagar. Aug 15: The Federation of Chambers of Industries Kashmir (FCIK) has expressed concern over the “continued exclusion and debarment” of Micro, Small and Medium Enterprises (MSMEs) from developmental projects for “works contracts” and has called upon the authorities to restrict departments from floating machinated tenders.

“While the local MSMEs have completely been excluded from major developmental projects like Revamped Distribution Sector Scheme (RDSS), Smart City Project and other such projects over past many years on one or the other pretext, similar pattern is now being followed in smaller projects also”, stated FCIK in a statement to Ziraat Times.

Exemplifying a case in point, FCIK has referred to a tender issued by Executive Engineer, Flood Spill Chanel Division Narbal vide e-NIT No: 09 of 2024-25 dated 2-08-2024 under nomenclature “construction of chain link fencing along the bank of Mamath Khul Budgam” for an estimated cost of 2 Crores.

” The chain link fencing is an industrial product manufactured and supplied by MSMEs engaged in such activity ” observed FCIK, adding that fixing and installation comes under service providing which could be done by both the civil contractors as well as MSMEs registered for combined activity of “manufacturing and services” on Udyam Registration Portal.

FCIK informed that hitherto the departments would generally procure ‘tested’ Chain link from MSMEs and later float tenders for its installation through civil contractors.

“We are amazed to note the nomenclature “construction of chain link fencing” used in the instant case by the department when in its widely used context “construction” applies to buildings, roads and other such infrastructure where the components of work becomes indivisible” said FCIK President Shahid Kamili.

He said that “Providing and fixing of chain link fencing” contained approximately 80-90% component of manufacturing and supply and only 10-20% component of service providing in installation.

The President FCIK regretted that the department has erred by bringing the works under “Works Contract” which applied to major composite projects like construction of buildings, bridges, highways, railways and other infrastructure.

The President informed that the Ministry of MSME, GOI has already clarified that Udyam Registration Portal provides an opportunity to MSMEs for seeking registration for combination of their major activity of manufacturing as well as services vide their circular No: F.No: 5/2(6)/2022/E-P&G/Policy (E-4020978) dated 4th January, 2023.

The Ministry has further clarified that all economic activities carried out by MSMEs were based on National Industrial Code (NIC) of 2008 which include service providing component.

FCIK has decided to take up the issue with Chief Secretary for restricting departments from floating manipulated tenders more so in context of reviving marketing support to MSEs from Public Procurements to safeguard the interests of manufacturing sector, the statement added. FCIK has also expected that the Principal Secretary Irrigation and Flood Control and concerned Chief Engineer will take cognizance of the case and resolve it in the best interest of local manufacturers. They need to realize that participation of MSMEs will further enhance the competition in ascertaining competitive rates and standard works, the statement stated.