Save Startup’s/MSME

 To,

, Department of Expenditure (Procurement Policy Division), Ministry of Finance

Through: Department for Promotion of Industry and Internal Trade (DPIIT)


Subject: Mandatory 100% Relaxation of Prior Experience & Turnover for DPIIT Startups — Removal of Restrictive Conditions under Clause 7.3.3-6 of the Procurement Manual, 2025

1. Vision vs. Reality

The Prime Minister’s Startup Mission was launched to enable first-generation entrepreneurs to participate in nation-building without being excluded by legacy-based filters of turnover and past experience.

However:

  • Clause 6.2.3 of the 2025 Procurement Manual correctly states that relaxation is “not optional but has to be ensured.”
  • Clause 7.3.3-6, along with additional restrictive conditions inserted by procuring entities, imposes caps, thresholds, and backdoor barriers that defeat the very purpose of DPIIT Start-up recognition.

2. Key Problem

(a) 20% Cap Neutralizes Relaxation

Even after applying the “20% waiver,” Startups remain disqualified in Railways, NHAI, and other ministries.

(b) Restrictive ATC/SCC Conditions

Procuring entities often add Additional Terms & Conditions (ATC) or Special Conditions of Contract (SCC) that act as backdoor exclusions. Examples include:

            •          Requiring existing manpower strength of not less than 100 staff,

            •          Insisting that all key experts must be on-roll before award of the project,

            •          Linking turnover to multiples of project cost,

            •          Demanding prior experience with PSU/CPSE consultancies.

which effectively nullify DPIIT relaxations.

 

(c) Result: Zero Participation

Since inception, not a single DPIIT Startup consultancy firm has been engaged in Railways, Highways, or other major ministries. This reality alone shows that the current framework defeats the Prime Minister’s vision.

3. Requested Corrections

We respectfully submit that Clause 7.3.3-6 and related provisions be amended to state explicitly:

  1. 100% Mandatory Relaxation
    • Prior turnover and prior experience requirements shall be fully waived for DPIIT Startups.
    • No percentage cap (like 20%) shall be imposed.
  2. No Restrictive Additional Conditions
    • DPIIT Startups shall not be subjected to substitute conditions(e.g., minimum project length, minimum number of DPRs, prior PSU work experience) that defeat the relaxation.
    • Only technical quality parameters(staff, methodology, innovation, capacity to deliver) may be evaluated.
  3. Exceptions Narrowly Defined
    • Waiver may be denied only for public safety, national security, or healthprocurements, with recorded written justification.
  4. Transparency & Accountability
    • Ministries must publish data on:
      • How many DPIIT Startups applied,
      • How many were disqualified solely on experience/turnover grounds,
      • How many were actually awarded consultancy contracts.
    • This will measure whether the PM’s Startup Vision is being genuinely implemented.

4. Policy Language Proposed (Replacement for 7.3.3-6)

“For DPIIT-recognized Start-ups (Rule 173(i), GFR 2017), procuring entities shall grant 100% relaxation from prior turnover and prior experience requirements, without imposing any restrictive substitute conditions. Startups shall not be disqualified solely due to lack of prior turnover or past consultancy experience, provided they meet quality and technical specifications. Denial of such relaxation is permissible only in exceptional cases involving public safety, national security, or health, with reasons recorded in writing.”

5. Conclusion

  • The Prime Minister’s intent was to let Startups stand on their own feet and contribute directly to infrastructure growth.
  • The present practice of capping relaxation and adding restrictive conditions completely defeats this intent.
  • The corrective step is simple and transformative: a clear directive that DPIIT Startup relaxation in turnover and experience is 100% mandatory and unconditional.

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