The Centre has proposed to relax the General Financial Rules (GFR) to enable all government organisations to accept “untested innovative goods and services solutions from start-ups.” The government also plans to do away with “competitive tendering” while placing orders from such start-ups as it would amount to competition between “established and new business entities.”
The plan proposes that a minimum 2% of the procurement budget of a ministry or department may be “earmarked for procurement of such goods or services which are yet to be tested or evaluated and brought to market as acceptable commercial product service or technology.”
In her maiden budget speech on July 5, Finance Minister Nirmala Sitharaman had announced easing tax scrutiny for start-ups and those investing in such firms.
On July 10, the Ministry of Finance asked all government departments to send their comments on its proposal to insert a new Rule 144A in General Financial Rules relating to special consideration for procurement incidental to development of untested goods and services.
GFRs are a compilation of rules and orders of Government of India to be followed by all while dealing with matters involving public finance.
“Supporting innovation and entrepreneurship is part of public policy to develop domestic manufacturing capability. Hence ways and means need to be found to screen proposals for new development to pick up promising ones based on thorough examination by domain experts for financing from public exchequer,” the government said in the proposal.
“The Ministries or Departments may approve incurring expenditure incidental to development of new products and technologies which require proving a concept or developing and testing prototypes,” the Centre said.
