The Karnataka government has decided to exempt tech startups from paying earnest money deposit (EMD) during procurement of technology products in a bid to encourage them to take up government projects.
The exemptions will be for tenders below Rs 50 lakh and applicable to startups empanelled with the Department of Information Technology, Biotechnology and Science and Technology. In case of large tenders, government will give more weightage to a bid from a firm which has a tie-up with any startup.
According to officials, the provisions will be applicable only for ‘deep-tech’ projects such as cyber security, blockchain, artificial intelligence, drone tech etc.
A gazette notification was issued recently by the government, amending the Karnataka Transparency in Public Procurement (KTPP) Rules. Apartment from laying down guidelines for the selection of startups for government tenders, it also set limits for the number of contracts for any eligible startup.
Any startup that wants to avail this benefit should be “registered with Karnataka Innovation and Technology Society (KITS) as an entity in Karnataka”. Such startups shall be exempted from payment of EMD during the procurement of technology products or goods or solutions.
“...any procurement under this provision shall not exceed Rs 50 lakh and the number of contracts issued to a particular startup by a procurement entity shall be limited to two contracts and by multiple procurement entities shall be limited to five contracts in each financial year,” the notification stated.
Minister for IT, BT and Science & Technology C N Ashwath Narayan said the new rules removed the hurdles faced by startups when bidding for government projects. “We have also fixed a maximum ceiling for the amount of project any startup can take up under the initiative,” he said.
Meena Nagaraj, director of the department said that the rules were “amended to help deep-tech startups”. The provisions will allow a startup to take up Rs 2.5 crore worth projects during a fiscal. Since a startup is empanelled for three years, a startup can take up works up to Rs 7.5 crore, she added.
KITS managing director Champa E said the initiative was along the lines of ‘GeM startup runway’. “The provisions will only be applicable to emerging, innovative products required by government departments,” she said.
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