CPSE Procurement from Small Firms Surpasses 42% in FY26: A New Milestone for India’s MSMEs

India’s Central Public Sector Enterprises (CPSEs) have achieved a significant milestone in promoting homegrown entrepreneurship. In the ongoing fiscal year 2025-26, CPSE procurement from micro and small enterprises (MSEs) has already crossed 42% of their total purchases, a remarkable leap from 35% in the previous financial year. This achievement exceeds the government-mandated threshold and underscores India’s commitment to supporting its vast network of small businesses, which are critical to economic resilience and job creation.

Government Mandate Fueling Growth

The impressive rise in CPSE procurement is deeply rooted in policy changes initiated in 2018. Recognising the vital role of MSEs, the government revised its Public Procurement Policy to mandate that a minimum of 25% of all public sector purchases be made from MSEs, increasing this from the earlier 20%. The policy added a special focus on inclusivity, earmarking 3% of purchases for women-led enterprises.

Accelerating Numbers and Fiscal Impact

Latest data for FY26 shows that CPSEs have already made total purchases worth ₹35,090 crore, with MSEs contributing ₹15,224 crore, amounting to a 42.2% share. Of this, women-led firms secured contracts worth ₹1,088 crore.

A year-on-year comparison highlights the momentum:

• FY18: ₹26,344 crore (23%)
• FY22: ₹53,423 crore (32.48%)
• FY23: ₹61,033 crore (35.6%)
• FY25: ₹93,568 crore (35%)
• FY26 (so far): ₹15,224 crore (42.2% of ₹35,090 crore)

This consistent upward trajectory demonstrates both compliance and enthusiasm among CPSEs to engage with small businesses.

Digital Platforms and Policy Reforms: Key Drivers

The Government e-Marketplace (GeM) online procurement portal has played a pivotal role in democratizing access for small firms. Its transparent, efficient process has enabled MSEs to compete on a level playing field, expanding their opportunities for government contracts. Targeted policy and digital enablement have worked together to facilitate this growth.

MSMEs: Backbone of Indian Industry

Beneath these numbers lies a profound impact. India’s MSME sector comprises over 1 crore registered businesses and employs around 75 million people. These enterprises contribute to 36% of industrial output and account for 45% of exports, making their empowerment crucial for national economic ambitions.

Further Momentum in Budget 2025-26

This year’s Union Budget introduces additional reforms to help MSMEs thrive:

• Higher investment and turnover ceilings for classification
• Expanded credit guarantee schemes, benefiting startups and exporters
• Financial support for first-time entrepreneurs from disadvantaged backgrounds
• New sector-specific productivity initiatives for industries like leather, footwear, and toys

Looking Ahead: Building an Inclusive Economy

The record procurement from small firms signals more than compliance; it points to a transformation in India’s industrial landscape. Strengthening the link between CPSEs and small businesses, especially women-led, lays the foundation for a more inclusive, resilient, and dynamic economy. As digital solutions and forward-thinking policies continue to empower entrepreneurs, India’s MSME sector appears set for sustained, broad-based growth.