GeM reduces transaction charges; orders above Rs 10 crore to pay flat fee of Rs 3 lakh

In a step towards enhancing the ease of doing business and promoting inclusivity in the economy, the Government e Marketplace (GeM) has announced a major reduction in transaction charges for sellers and service providers on its platform. According to the Ministry of Commerce and Industry, under the new policy, all orders valued up to Rs 10 lakh will now attract zero transaction charges, doubling the previous order value ceiling of Rs 5 lakh.

For orders between Rs 10 lakh and Rs 10 crore, the transaction fee has been reduced to 0.30 per cent of the total order value, compared to the earlier charge of 0.45 per cent. Meanwhile, orders exceeding Rs 10 crore will incur a flat fee of Rs 3 lakh, a significant reduction from the previous cap of Rs 72.5 lakh.

With these changes, 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, subject to a maximum of Rs 3 lakh, irrespective of order size.

This marks a significant reduction in transaction fees, ranging from 33 per cent to 96 per cent, providing a substantial boost to sellers and service providers in terms of competitiveness.

This bold move is expected to democratise access to the public procurement system, particularly benefiting Micro and Small Enterprises (MSEs), which have historically faced financial and operational barriers.

By lowering transaction charges, GeM is levelling the playing field, creating opportunities for small businesses to compete and thrive in public procurement processes.

In addition to supporting smaller enterprises, the policy change aligns with the government's broader goal of reducing the cost of transactions and fostering a more competitive marketplace.

The reduction in fees is a direct response to feedback from the business community and reflects GeM's commitment to driving innovation and efficiency in the procurement ecosystem.

The financial year 2024-25 is proving to be a milestone for GeM, particularly in the services sector, which has seen 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 bolstered by a vast inventory of 325+ service categories available on the platform. GeM's user-friendly interface, coupled with its transparent e-bidding processes, has made it easier for government buyers to evaluate, select, and engage service providers.