GeM Procurement Rules Under GFR 2017 — Rule 149 and July 2024 Amendments Explained

1. What Is GeM and How Did It Come Into GFR?

Government e-Marketplace (GeM) was established in August 2016 by the Department of Commerce, with the aim of creating a transparent, efficient, and contactless online platform for government procurement of goods and services. It is a 100% Government-owned National Public Procurement Portal.

Before GeM, government procurement of common-use items (furniture, stationery, computers, vehicles) was fragmented across thousands of local purchase procedures, each susceptible to negotiation and discretion. The DGS&D (Directorate General of Supplies and Disposals) ran a Rate Contract system, but it was paper-intensive and prone to delays and disputes.

GFR 2017, issued in February 2017, was the first version of the General Financial Rules to give GeM a formal statutory basis through Rule 149. Since then, the Ministry of Finance has progressively expanded the GeM mandate and raised thresholds at which GeM use is mandatory, through a series of amendments — culminating in the most significant revision in July 2024.

Today, GeM lists over 45 lakh products and 12,000+ service categories, with over 70 lakh registered sellers and buyers. It is integrated with PFMS for direct payment processing and with NIC's e-procurement system.

2. Rule 149 — The GeM Mandate

Rule 149 of GFR 2017 is the cornerstone provision. Its essential command is: "The GeM portal shall be utilised by the Government Buyers for direct online purchases." The word "shall" makes this mandatory — not a preference or a suggestion.

The rule applies to all Central Government Ministries, Departments, PSUs, Autonomous Bodies, and other organisations that are covered by GFR 2017. State Governments and their agencies are covered to the extent they use central funds, and many States have independently adopted GeM through their own executive orders.

What Can Be Bought on GeM?

GeM covers:

• Goods: Common use items — IT equipment, furniture, stationery, vehicles, medical equipment, office supplies, and thousands of other product categories
• Services: Security services, cleaning services, IT services, transport services, manpower services, and many more categories
• Works: Certain minor civil works are also being brought onto the GeM platform progressively

Note: GeM is specifically for goods and services required for use in public service — it is not for goods intended for re-sale or for production. The distinction is the nature of use, not the category of goods.

3. Revised Thresholds After July 2024 Amendments

The Ministry of Finance, through OM No. F.1/3/2024-PPD dated 10 July 2024, significantly revised the financial thresholds in Rule 149. The revised thresholds (as compiled in the March 2025 bi-annual compilation of GFR amendments) are:

Special exception — Automobiles: The existing limit of ₹30 lakh for automobiles continues to apply for the second tier (₹50,000 to ₹30 lakh for automobiles). Above ₹30 lakh, online bidding or reverse auction applies.

This doubling of thresholds reflects the maturity of the GeM platform and the Government's confidence in it as a transparent procurement mechanism. For buyers, the practical implication is that many more purchases now fall into the simpler lowest-price category rather than requiring full online bidding.

4. Three-Tier Purchase Structure Under Rule 149

The structure of GeM procurement can be visualised as three tiers, each with progressively more competitive procedure as the value increases:

Tier 1: Direct Purchase (Up to ₹50,000)

At this level, the buyer can purchase from any seller on GeM who meets the required quality, specification, and delivery period. There is no requirement to compare prices or invite competition. The buyer simply selects an appropriate product and places the order. This is equivalent to the earlier "purchase without quotation" provision under Rule 154, but now channelled through GeM.

Important: even at this level, the buyer must ensure the price is reasonable. The GeM platform shows market prices and the buyer should not overpay.

Tier 2: Lowest-Price Purchase from Three Manufacturers (₹50,000 to ₹10 lakh)

At this level, the buyer must select from sellers of at least three different manufacturers and must buy from the one with the lowest price meeting specifications. The requirement of three manufacturers (not three sellers) is deliberate — it prevents a single manufacturer from gaming the market by registering multiple resellers on GeM.

The buyer also has the option to use GeM's online bidding or reverse auction tools even below ₹10 lakh — this is encouraged as it can yield better value.

Tier 3: Online Bidding/Reverse Auction (Above ₹10 lakh)

For purchases above ₹10 lakh, online bidding or reverse auction on GeM is mandatory. The buyer must create a bid on GeM, specify requirements, set the bid period (not less than a prescribed minimum), and award to the lowest valid bidder. The entire process — from bid creation to award — is conducted transparently on the platform with a full audit trail.

Reverse auction is a competitive dynamic pricing mechanism where sellers compete in real time by reducing their prices. It has consistently yielded significant savings (often 10–20% below initial quoted prices) for high-value purchases.

5. Reverse Auction and Online Bidding on GeM

Reverse auction (RA) on GeM deserves a closer look because it is the primary competition tool for high-value purchases. In a conventional tender, all bids are submitted in sealed covers and opened at a fixed time — there is no opportunity for bidders to revise downward based on competitors' prices. A reverse auction turns this on its head:

1. The buyer sets a "start price" (based on market estimates) and opens the auction for a fixed period (e.g., 2 hours).
2. Registered sellers on GeM bid in real time, each trying to undercut the others.
3. The auction automatically closes at the set time (with auto-extension if a new bid comes in the last few minutes).
4. The seller with the lowest valid bid wins.

GeM's reverse auction has a full electronic audit trail — every bid, every bidder, and every timestamp is recorded permanently. This makes it virtually impossible to manipulate post-facto. Buyers can use RA even below the ₹10 lakh mandatory threshold.

6. Annual Procurement Plan — Rule 148

Rule 148 requires every Ministry/Department to project their annual procurement requirements on GeM within 90 days of the budget announcement. This Annual Procurement Plan (APP) must:

• List all goods and services expected to be procured during the year
• Estimate quantities and indicative values
• Be published on GeM's portal for advance visibility to sellers

The APP serves multiple purposes: it allows sellers to plan their inventories and capacities, it helps GeM administer the platform, and it creates accountability for the Ministry — deviations from the APP require explanation.

Non-submission of the APP within 90 days of the budget is itself a GFR violation and is monitored at the level of the Chief Accounting Authority.

7. When Can You Procure Outside GeM? — Permissible Exceptions

The mandatory GeM obligation under Rule 149 has limited exceptions. Procurement outside GeM is permissible only in specific situations:

Critically: convenience is not an exception. The fact that a buyer has an existing vendor or finds it easier to deal with a known supplier does not justify bypassing GeM. Such bypasses invite audit objections and can attract disciplinary action.

When procuring outside GeM because an item is unavailable, the buyer must document the search on GeM (screenshot, date-stamped) and proceed with the next applicable procurement method under GFR.

8. Supplier Registration and Debarment — Rule 151

Rule 151 of GFR 2017 governs supplier registration and, critically, the debarment framework for suppliers who breach integrity norms.

Registration

Suppliers on GeM are registered for periods of 1 to 5 years by GeM administrators. Registration involves verification of business credentials, PAN, GST registration, and product/service compliance. GeM's self-certification system is progressively being strengthened with third-party verification.

Debarment for Integrity Breaches

Under Rule 151(iii), a firm found to have violated integrity norms — including bid rigging, misrepresentation, and bribery — can be debarred from government procurement for up to 10 years. The November 2021 MoF OM strengthened this framework with:

• A clearly defined process for initiating and adjudicating debarment
• A Web-based Central Public Procurement Portal (CPPP)-linked register of debarred firms that all Government buyers must check before awarding contracts
• Mandatory publication of debarment orders to ensure all Government entities are aware

A debarred firm cannot supply to any Central Government entity during the debarment period, regardless of which Ministry is the buyer. This is a powerful deterrent against procurement fraud.

9. Special Rule for Automobiles

Automobiles have always been a special category in government procurement given their high visibility, large value, and potential for misuse. Under the post-July 2024 Rule 149:

• Up to ₹25,000: Direct purchase (rarely applicable for automobiles)
• Above ₹25,000 to ₹30,00,000 (₹30 lakh): Lowest-price purchase from three manufacturers on GeM
• Above ₹30 lakh: Mandatory online bidding or reverse auction on GeM

The higher second-tier threshold for automobiles (₹30 lakh vs ₹10 lakh for other goods) reflects the reality that very few automobile models fall below ₹10 lakh in government configurations.

Additionally, the types of vehicles that can be procured, fuel standards, and other conditions are separately governed by Motor Vehicle-related GFR provisions and the Ministry of Petroleum's instructions on fuel efficiency norms.

10. Buyer Obligations on GeM

Beyond the procurement thresholds, Rule 149 and the GeM Terms and Conditions create a set of obligations for government buyers:

• Accurate specifications: Specifications must describe the functional requirement without naming specific brands. Brand-specific specifications that lock out competition are a GFR violation.
• No artificial splitting: Buyers cannot split requirements artificially to fall below a threshold that would require competitive bidding. This is explicitly prohibited under Rule 163 (splitting of orders).
• Timely payment: GeM's Terms and Conditions (with legal backing from GFR 2017's contract management chapter) require payment within 10 working days of receipt and acceptance of goods.
• Quality inspection: Buyers must inspect goods on receipt and issue a Goods Receipt Note (GRN) on GeM within a specified period. Delayed GRNs attract interest liability.
• Feedback and rating: Buyers must rate sellers after each purchase — this contributes to GeM's seller quality assurance framework.

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