GeM to impose penal interest on delayed payments from 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. The provision would be effective from July.  

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A functionality enabling the public procurement platform, GeM, to apply punitive interest for making late payments to vendors by government ministries and departments will 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 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.

“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 announced at the CII MSME Growth Summit. The inclusion of this clause would discourage departments from delaying payments.

Currently, only state governments, central armed police forces, government departments, ministries, and public sector organizations are permitted to conduct transactions using this platform. From autos to office supplies, the portal offers a vast variety of goods.

Some of the primary product categories are cars, computers, and office furniture. The site includes services including webcasting, analytics, waste management, transportation, and logistics. The largest such platform in the world is KONEPS, located in South Korea. The second place right now belongs to GeM.