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Procurement Reforms for Innovation
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Context:
The Government of India recently amended General Financial Rules (GFR) 2025, introducing exemptions from the Government e-Marketplace (GeM) and enhanced financial thresholds to improve R&D procurement.
Understanding the Reform
- Policy Shift: The reforms allow institutional heads to bypass GeM for specialised R&D equipment and raise direct purchase limits from ?1 lakh to ?2 lakh.
- Delegated Authority: Approval powers for global tenders up to ?200 crore are delegated to vice-chancellors and directors, reducing bureaucratic delays.
- Catalytic Procurement: The changes align with the principle of using procurement as a driver of innovation rather than mere cost control.
Global Best Practices
- Germany’s Approach: Through its High-Tech Strategy and KOINNO agency, procurement is linked with innovation promotion and supplier ecosystem building.
- United States Model: The SBIR programme reserves federal R&D funds for startups, fostering early-stage innovation through phased procurement contracts.
- South Korea’s Example: Pre-commercial procurement supports prototypes and moonshot technologies, prioritising ambition over cost benchmarks.
Challenges and Way Forward
- Implementation Risk: Success depends on monitoring misuse while maintaining agility and building institutional trust in procurement discretion.
- Domestic Ecosystem: Over-reliance on global tenders may marginalise Indian suppliers unless domestic R&D is empowered to compete globally.
- Future Path: Suggested reforms include outcome-weighted tenders, AI-augmented sourcing, sandbox exemptions, and co-procurement alliances among Indian labs.
Practice Question:
“Public procurement reforms can act as a catalyst for India’s research and development ecosystem. Critically analyse with reference to the General Financial Rules (GFR) 2025 reforms.” (250 words)
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