India's public procurement policy for micro and small enterprises sets a target that a minimum percentage of annual procurement from central departments and PSUs should come from MSEs. The policy applies across goods and services, with specific carve-outs for certain excluded categories.
The purchase preference mechanism allows a participating MSE to match the lowest quoted price when its own quote is within a defined margin above the lowest bidder, provided the lowest bidder is not itself an MSE. The MSE then wins the order at the lower price for a portion of the quantity.
Registered MSEs also benefit from exemption from the EMD and, in many tenders, from payment of the tender document fee. To claim these benefits the bidder must hold a valid Udyam registration and upload the certificate with the bid. The same registration is used to verify eligibility under the preference rules.