The next frontier for GeM: From digitization to inclusion

• by Vikram Sharma, Kushagra Harshavardhan and Allina Tiwari
• Nov 4, 2026
• 5 min

The next phase of India’s Government e Marketplace (GeM) must move beyond digital access to sustained inclusion. It needs to integrate financial services, predictable payments, liquidity solutions, assisted onboarding, logistics, and accessible digital tools. In this blog, the second of a three-part series, we examine how, through this integration, GeM can reduce barriers, strengthen small sellers, and make public procurement more transparent, efficient, and inclusive.

How can the Government e-Marketplace (GeM) remove the operational and financial barriers that hold back small sellers?

The first blog in this series examined how GeM has transformed access to public procurement. Yet the journey extends far beyond registration. As that blog showed, three broad challenges still limit small enterprises: friction around deposits and platform charges, uncertainty in seller payments, and wider barriers to inclusive procurement. This blog examines those challenges and the digital solutions that could address them. GeM’s next phase of inclusion requires a stronger operational and financial architecture to underpin public procurement.

How can GeM simplify seller deposits and platform charges?

Micro-enterprises encounter several financial touchpoints when they participate in public procurement. These include earnest money deposits (EMDs), performance bank guarantees (PBGs), transaction charges, and annual milestone charges (AMCs).

Many of these transactions still extend beyond the GeM ecosystem. A transaction may begin on GeM, while external systems or physical channels complete, verify, or track the financial process. For example, sellers can initiate PBGs through GeM, but banks and buyers manage issuance, submission, verification, and release. Most related documentation remains manual and outside the portal. Buyers and sellers therefore have limited visibility into the status of deposits, guarantees, and refunds. The fragmented process creates avoidable manual work and makes end-to-end tracking difficult.

What would an integrated financial architecture look like?

GeM can replace fragmented financial processes with an integrated architecture. The government can bring these seller-side transactions onto GeM through deeper integration with banks and payment aggregators. Each journey could begin on GeM, route digitally to the relevant financial institution, and return execution and status updates to the portal. GeM could, for example, work with financial institutions to create an escrow-based mechanism for EMDs, similar to the one that existed for caution money. Sellers could apply through GeM. A partner institution would issue the EMD and hold it in escrow until the procurement outcome is known. The system could then automatically release or refund the amount, as applicable, and update the status on GeM.

A unified dashboard with real-time status updates and automated notifications could reduce manual follow-ups and improve transparency for buyers and sellers. It could also shorten resolution times, reduce administrative costs, and give sellers greater certainty about cash flow.

How can GeM make seller payments more predictable?

Timely payments are critical for small businesses, particularly those with limited working capital. GeM has defined payment timelines, but the end-to-end journey varies by buyer type and may span multiple systems, stakeholders, and approval processes. Payments by public sector undertaking (PSU) buyers are more time-bound because they use the GeM Pool Account (GPA). This escrow-like account parks buyer funds and includes an 80%/20% auto-release fallback. If a buyer does not initiate payment within 10 days of the issuance of the Consignee Receipt and Acceptance Certificate (CRAC), the system automatically processes and pays 80% of the consignment value.

For government departments, however, the system blocks the budget at the time of order placement without setting aside funds. Once the CRAC is generated, the Drawing and Disbursing Officer (DDO) must process the payment, followed by the Pay and Accounts Officer (PAO). Although the rules set a 10-day payment timeline, no equivalent automatic release mechanism exists when processing is delayed. Budget blocking without fund parking, combined with manual processing, makes payment timing less predictable for sellers. The data reflect this uncertainty. According to the MSME Samadhaan portal’s Age-Category Amount Wise Pendency Report, as of September 2026, micro and small enterprises (MSEs) had filed 28,503 grievance applications involving USD 1.6 billion in delayed payments. Of those applications, 4,083 remained pending, including 3,899 for more than one year.

Which levers can improve payment predictability?

No single fix can make payments predictable. Three levers must work together: Budget and fund availability, rules-based execution, and liquidity bridging. Each requires a distinct digital design choice.

The first lever strengthens fund flows by ensuring that procurement has an available budget and that funds are set aside when payment becomes due.

Across procurement modes, every order should define payment conditions, delivery milestones, and compliance requirements. GeM can translate these conditions into machine-readable rules that govern fund release.

The second lever uses rules-based execution to enforce those conditions. A rules-as-code (RaC) approach could embed them in smart payment systems and shift workflows from manual discretion to automated, milestone-based execution. “If-then-else” logic could define each payment condition, the responsible approver, the verification method, and the turnaround time. The result would be a live, transparent checklist for all stakeholders, with better visibility and traceability throughout the payment lifecycle.

GeM can codify the conditions as standardized rules to ensure consistent compliance and reduce discretion. Integration across GeM, PFMS, and state IFMS platforms could support fund blocking, payment pre-authorization, milestone-based releases, and real-time payment tracking.

The third lever bridges the seller’s liquidity gap by providing working capital against receivables. GeM’s ongoing integration with the Trade Receivables Discounting System (TReDS), which allows sellers to access invoice financing against their orders, moves in this direction. Deeper integration with FinTech firms and private financial platforms could expand financing options. Sellers could then access working capital based on their GeM orders and transaction history.

How can GeM support the wider seller ecosystem?

Participation barriers extend beyond payments. For many small enterprises, challenges begin long before buyers place an order and continue after buyers fulfill it. Sellers often struggle to classify products and prepare catalogs, particularly when they must navigate complex category structures and technical specifications. Logistics and reverse pickups remain expensive and difficult to manage, especially for enterprises in rural and semi-urban areas. Limited working capital further restricts their ability to fulfill larger orders and expand. Women entrepreneurs and first-time sellers often face additional barriers because of information asymmetry and limited digital capabilities.

What would an ecosystem platform provide?

The next generation of procurement platforms can evolve from transaction platforms into ecosystem platforms. Rule-based catalog tools, multilingual interfaces, and assisted onboarding can simplify product listings and lower digital literacy barriers. These features can help first-time sellers navigate categories and procurement pathways and reduce participation costs. Partnerships with logistics providers such as India Post can support affordable last-mile delivery and reverse logistics, which eases the operational burden on small sellers. GeM can also embed access to finance within the procurement ecosystem. Invoice discounting platforms and partnerships with financial institutions can provide working capital, which allows enterprises to finance production without waiting for government payments. Over time, and with user consent, GeM can use transaction histories to build alternative credit profiles for small businesses and expand access to formal finance.

What comes next?

How can GeM turn digital access into sustained participation?

Many of the necessary building blocks already exist. The priority is to connect them through a transparent, interoperable architecture that reduces friction across the seller journey. This integration can make deposits easier to track, payments more predictable, liquidity more accessible, and participation more practical for small enterprises. The third blog in this series will examine the longer-term shifts that global public procurement practices suggest for India.