Beginning in July, GeM will provide penal interest on late payments

A top official said on Tuesday that a feature allowing the public procurement platform GeM to apply punitive interest for making late payments to vendors by government ministries and departments would be active in July.

For late payments to merchants selling items on the GeM platform, the government agreed to impose a 1% fine on departments and agencies in 2020.

A top official on Tuesday indicated the clause will go into force in July.

According to P K Singh, CEO of Government e-Market (GeM), there are problems obtaining timely payments from clients, notably state governments.

According to him, payments from the federal government are made in 10 to 15 days, but there are issues with payments from state governments.

Let me assure you that by the end of July, this capability for applying the punitive interest will be operational. We are working on it.From October, interest charges would be made, Singh said at the CII MSME Growth Summit.

The inclusion of this clause would discourage departments from delaying payments.

For all central government ministries and departments to make online purchases of products and services, the commerce ministry opened the Government e-Market (GeM) platform on August 9, 2016.

Goyal expressed optimism that this fiscal year, spending on products and services via the government site GeM will surpass Rs 3 lakh crore. In 2022–2023, it exceeded Rs 2 lakh crore.

More than 62 lakh vendors and service providers are part of GeM, which includes over 63,000 government buyer entities and offers a broad variety of goods and services.

Currently, this site may be used for transactions by state governments, central armed police forces, government departments, ministries, and public sector organisations.

The site offers a broad variety of goods, from autos to office supplies. Among the most important product categories are those for cars, computers, and office furnishings.

The site includes services such as webcasting, analytics, waste management, logistics, and transportation. The biggest such platform worldwide is KONEPS, which is based in South Korea. At the moment, GeM is in second place.