Government e-Marketplace (GeM) for MSMEs: mandatory seller registration, zero commission, and the ₹25L direct purchase exemption

GeM (gem.gov.in) is the government's official procurement portal, and seller registration is free with zero commission — a Udyam-registered MSME can quote against any government demand. Two numbers decide how you sell: direct purchase without bidding on GeM runs up to ₹50,000 for goods (revised upward from ₹25,000), and DPIIT-recognised startups can be procured from directly up to ₹25 lakh without a tender. MSMEs also hold a 15% price-preference margin over the L1 bid.

What the law actually requires

GeM is the default public-procurement channel. Central ministries, departments and CPSEs are required to procure goods and services through GeM, which is why the seller side matters: if you are not listed, the largest buyer in the country cannot see you. GeM is a government-owned platform under the GeM policy framework administered by the Ministry of Commerce — registration, catalogue listing, bidding and contract management all happen on the portal.

The two direct-purchase exemptions.

The ₹25 lakh exemption is the headline for startups: government entities can procure up to ₹25 lakh from a DPIIT-recognised startup without going through the standard tender process — the purchase is made on GeM against the startup's catalogue. For a startup MSME this collapses the sales cycle from a three-month tender to a purchase order.

The MSME purchase preference. Under the Public Procurement Policy for MSEs (Order of 2012, as amended) and the Public Procurement (Preference to Make in India) Order 2017:

• At least 25% of a procuring entity's annual procurement must come from MSEs, with sub-targets of 4% for SC/ST-led and 3% for women-led MSEs.
• An MSE whose quoted price is within 15% of the L1 (lowest) price is given the order at the L1 price — the "purchase preference margin." This is the single most valuable clause for a small company: it does not need to be the cheapest, only within 15% of the cheapest.
• Preference is claimed only where the product is manufactured or the service delivered by the MSE (no pass-through trading).

Seller economics are clean. GeM charges no commission, no listing fee, and no transaction fee to sellers. Payment follows the buyer's acceptance of goods/services on the portal, and GeM has a buyer-payment and grievance framework that presses government departments to settle within the agreed terms — which, for MSE suppliers, interacts with the 45-day rule of s.15 MSMED Act 2006.

Registration requirements. To register as a seller on GeM, a Pvt Ltd needs three things linked on the portal: PAN, GSTIN, and Udyam Registration Number. Startups additionally upload their DPIIT recognition certificate to unlock the ₹25 lakh exemption and startup-specific catalogues.

What changed FY 2025-26

• GeM is deeper in services. The platform expanded service categories (IT, facility management, consulting), which matters for a services Pvt Ltd that previously assumed GeM was only for goods sellers.
• Make-in-India preference is applied at the portal level. The GeM algorithm flags local-supplier preference under the 2017 Order, so an MSME manufacturing in India competes on a different basis than an importer — and the 15% margin is applied automatically at L1 determination.
• Startup onboarding is streamlined. DPIIT recognition syncs into the GeM seller profile, making the ₹25 lakh direct-purchase route available to startups without a separate approval each time.

Worked example: BlueSky Pvt Ltd

BlueSky Pvt Ltd (Small, Udyam-registered) sells IT consulting services. It registers on GeM and targets a central government department's annual requirement.

If BlueSky had quoted ₹47,00,000 — beyond the ₹46,00,000 (L1 + 15%) ceiling — the preference would not apply and the order would go to the L1 bidder. The 15% margin is the number to remember in every GeM quote: price at or below 1.15 × L1, and an MSME stays in contention.

For a DPIIT-recognised startup, the same department could instead issue a direct purchase order up to ₹25,00,000 against the startup's catalogue without any bid at all — a route that bypasses the tender timeline entirely.

Step-by-step: get selling on GeM

• Confirm Udyam registration — it is a hard prerequisite for the MSME preference and the 15% margin.
• Register the company on gem.gov.in with PAN, GSTIN, Udyam number, bank account and authorised signatory details.
• Upload a DPIIT recognition certificate if the company is a startup — it unlocks the ₹25 lakh direct-purchase exemption.
• Build the catalogue with competitive rates and the necessary experience/quality certifications for the product or service codes you target.
• Set bid alerts and respond to RFQs/bids on the portal; apply the 15% rule to your quoted price.
• Track the contract on the portal — acceptance, invoicing and payment all happen through GeM, and an overdue MSME payment can be pursued under s.15 MSMED Act.

FAQ

Is GeM registration really free?
Yes — GeM charges no registration, listing or commission fee to sellers. The costs are the effort of building the catalogue and, where applicable, the price competition itself. There is no platform charge on a won contract.

What exactly is the ₹25 lakh direct purchase exemption?
It is the DPIIT-startup rule: a government entity can procure up to ₹25 lakh from a DPIIT-recognised startup without the standard tender, through GeM. It is separate from the ordinary GeM direct-purchase ceiling of ₹50,000 for goods, which applies to any listed seller.

How does the 15% MSME price preference work?
When the lowest (L1) bid is ₹40,00,000, any Udyam-registered MSE quoting up to ₹46,00,000 (L1 + 15%) is allowed to match the L1 price and win. The preference applies only where the MSE manufactures the goods or provides the service itself.

Our company is a Medium enterprise. Do we get the same GeM benefits?
The 25% procurement policy and the 15% purchase preference target micro and small enterprises; a medium enterprise does not get the price-preference margin. It can still register, list and bid on GeM like any supplier.

For a GeM onboarding and DPIIT-recognition review, visit pvtltd.co.

Sources

• GeM portal policy (gem.gov.in) — seller registration, direct purchase, zero commission
• Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, as amended (25% / 4% / 3% targets; 15% purchase preference)
• Public Procurement (Preference to Make in India) Order 2017
• DPIIT startup recognition and the ₹25 lakh direct-purchase exemption for government procurement
• s.15 MSMED Act 2006 (45-day payment protection)

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See Also

• Section 43B(h): the 45-day MSME payment rule that changes your year-end
• MSME Samadhaan: how to recover delayed payment from large companies through the MSCI complaint process
• Udyam registration for a Pvt Ltd company: who qualifies, the ₹250Cr threshold, and how it's different from Udyog Aadhaar

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