Orders above ₹10 Crore to pay flat fee of ₹3 Lakh, a massive reduction from previous transaction charges capped at ₹72.5 Lakh

Aligning with the Government’s ongoing commitment to foster ease of doing business and build a more inclusive economy, Government e Marketplace (GeM) has recently announced a significant reduction in the transaction charges levied on Sellers / Service Providers transacting on its platform. This bold move was part of Govt’s 100 days initiative.  Accordingly, GeM has announced a New Revenue Policy of the portal which was given effect to from 9^th August 2024.

As per this Policy:

All orders valued up to ₹10 Lakh will now attract zero transaction charges, as opposed to the earlier order value ceiling of ₹5 Lakh.

Orders above ₹10 Lakh up to ₹10 Crore will be levied transaction charges worth 0.30% of total order value, as compared to earlier transaction charges of 0.45%.

Orders above ₹10 Crore will now pay a flat fee of ₹3 Lakh, a massive reduction from the transaction charges previously capped at ₹72.5 Lakh.

Nearly 97% of the transactions on GeM will be attracting zero transaction charges, while the remaining will incur a nominal fee @0.30% of order value above ₹10 Lakh subject to a maximum of ₹3 Lakh only, irrespective of the size of the order. This step is a watershed moment in terms of Ease of Doing Business on GeM and is also in line with Government’s commitment of reduction in cost of transactions. In a single stroke, GeM has reduced its transaction fee by almost 33% to 96% which is expected to greatly benefit GeM Sellers/ service providers to become more competitive.

The latest transaction fee structure is aimed at democratizing access to public procurement ecosystem. It aims to particularly benefit MSEs, which often face challenges navigating cumbersome financial and operational barriers. By considerably lowering transaction charges, GeM aims to level the playing field, thereby creating opportunities for small-scale businesses to deliver value and innovation in public procurement.

FY 2024-25 is also a watershed moment for Services sector wherein services sector leapfrogged at a very rapid pace surpassing Product GMV by a good margin. Service GMV of Rs. 1.39 Lakh crore as on 31^st August 2024 is accounting for approximately 65% of the total Merchandise Value of ₹2.15 Lakh Crore for the same period. Several high value service bids have been awarded on the platform.

This surge in services procurement is supported by a large inventory of 325+ service categories on the platform. Coupled with its user-friendly interface, GeM has made it easier for government buyers to evaluate, select and engage service providers on the basis of their tailored needs. The platform’s transparent e-bidding processes ensure fair competition, while ensuring that government buyers find the right partner for their specific requirements.

About GeM:

Government e Marketplace is a unified digital platform that facilitates end-to-end procurement of goods and services by various Central Ministries, State Departments, Public Sector Enterprises, Autonomous Bodies, Panchayats, Multi & Single State Cooperatives etc. Our Prime Minister’s concerted efforts to harness the power of digital platforms to achieve ‘Minimum Government, Maximum Governance’ led to the genesis of GeM in 2016. The online portal was established with a clear objective to eliminate age-old manual public procurement processes that were riddled with inefficiencies and corruption.

GeM provides a paperless, cashless and contactless ecosystem for government buyers to directly purchase products and services from pan-India sellers and service providers through an online platform. GeM covers the entire gamut of procurement process, right from vendor registration and item selection by buyers to receipt of goods and facilitation of timely payments. GeM was envisioned to utilise the agility and speed that come along with a digital platform created with a strategic intent to reinvigorate public procurement systems and bring about a lasting change for the underserved as well as the nation.

Transaction charge reduction on public procurement platform lowers barriers and expands access for small suppliers and service providers. GeM's new revenue policy effective 9 August 2024 reduces transaction charges: orders up to a low-value threshold attract zero charges; orders between that threshold and a high-value ceiling incur a reduced percentage fee; and orders above the high-value ceiling pay a fixed, substantially lower flat fee capped irrespective of order size. The revision shifts most transactions to zero fees while imposing a nominal, capped fee on remaining transactions, aiming to lower transaction costs and expand access to public procurement for smaller suppliers.