Section 11 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 11 allows the Central Government or a State Government to notify, by order, preference policies for buying goods and services produced and provided by micro and small enterprises. It covers purchases by Ministries and departments, by their aided institutions and by public sector enterprises. The section gives the power; the content of any preference sits in the order that is actually notified.
Under section 11, the Central Government or the State Government may, by order notify from time to time, preference policies in respect of procurement of goods and services produced and provided by micro and small enterprises. The policies apply to Ministries or departments, or their aided institutions and public sector enterprises. The aim is to facilitate promotion and development of micro and small enterprises. Medium enterprises are not mentioned.
The text of section 11
The section reads in substance: "For facilitating promotion and development of micro and small enterprises, the Central Government or the State Government may, by order notify from time to time, preference policies in respect of procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries or departments, as the case may be, or its aided institutions and public sector enterprises."
| Element | Text |
|---|---|
| Who may notify | Central Government or State Government |
| Form | Order notified from time to time |
| Subject | Preference policies in respect of procurement of goods and services |
| Beneficiaries | Micro and small enterprises |
| Buyers bound | Its Ministries or departments, its aided institutions and public sector enterprises |
The phrase "as the case may be" ties each Government to its own buying bodies: the Centre to its Ministries, departments, aided institutions and public sector enterprises, and a State to its own.
What the section does and does not do
It authorises; it does not itself prefer. The wording is "may". The Act does not say what the preference is, whether it is a price margin, a reservation, an exemption from earnest money or anything else. The Act does not fix a percentage or a rate. Each notified policy has to be read for its own terms. Our article on MSME concessions in government tenders discusses tender-side concessions; check each policy's own text before relying on it.
It covers micro and small enterprises only. Compare section 10 on credit, which names micro, small and medium enterprises. A medium enterprise cannot rely on section 11.
It covers buying, not selling. The section deals with "procurement of goods and services ... by its Ministries or departments ... or its aided institutions and public sector enterprises". It does not regulate private buyers.
It is not a payment rule. When a government body buys from a micro or small supplier, the payment terms of sections 15 and 16 apply to that transaction on the same footing as any other buyer. Section 11 gives the preference in purchase; Chapter V deals with payment. A government department that delays payment to a supplier that has filed a memorandum is a "buyer" in the section 2(d) sense: "whoever buys any goods or receives any services from a supplier for consideration". See section 15.
The role of registration
Since the benefit goes to "micro and small enterprises", a supplier must be able to show it is one. The classification comes from the notification under section 7 and, since 1 April 2025, from the limits in S.O. 1364(E): micro, investment in plant and machinery or equipment not above Rs 2.5 crore and turnover not above Rs 10 crore; small, Rs 25 crore and Rs 100 crore. The medium limits of Rs 125 crore and Rs 500 crore do not matter for section 11 since it does not cover medium enterprises. A preference policy may add its own proof requirements. If you need a registration certificate that records your size class correctly before bidding, our MSME Udyam registration service can help. Then read the policy or tender document to see what proof is called for.
Limits to keep in mind
- The Act is silent on the amount or form of the preference.
- The Act is silent on which goods or services are covered; it speaks only of goods and services "produced and provided by micro and small enterprises".
- It does not require a buyer to buy from any particular enterprise.
- An order under section 11 is not among the notifications that section 29(3) requires to be laid before Parliament; that clause names notifications under section 9 and rules under section 29.
Practical examples
Example 1: a State purchase order. A State Government notifies an order giving a preference to micro and small enterprises when its departments buy stationery. The authority for that order is section 11, but the detail is in the order. A supplier should read the order for eligibility and the proof needed.
Example 2: a public sector enterprise. A public sector enterprise floats a tender. If the Central Government has notified a preference policy under section 11 that covers public sector enterprises, the tender has to follow it. The enterprise should check the policy's current text.
Example 3: a medium manufacturer bids. A medium manufacturer asks for a section 11 preference. The section refers only to micro and small enterprises, so the claim has no footing in the section's words.
Common mistakes
- Assuming section 11 prescribes a fixed margin or reserved share. The Act names none.
- Claiming the preference as a medium enterprise.
- Forgetting that preference in buying does not relax the payment rules; the buyer's payment duty runs under section 15.
- Relying on an old classification. Use the limits in force at the time of the bid.
Need help getting tender-ready?
If you plan to bid for government or public sector purchases, your registration details, size class and activity should match your documents before you apply. Our MSME Udyam registration team can check the certificate and update it where needed.
Key takeaways
- Section 11 lets the Centre or a State notify preference policies for procurement from micro and small enterprises.
- It covers Ministries or departments, aided institutions and public sector enterprises.
- Form of notification: an order, from time to time.
- The Act fixes no percentage, margin or list of goods.
- Medium enterprises are not within the section, and payment duties remain under Chapter V.
Read next
- Section 10 of the MSMED Act, 2006: Credit facilities to MSMEs
- Sections 12, 13 and 14 of the MSMED Act, 2006: Funds, grants and administration
- MSME Concessions in Government Tenders: EMD and Price
- GeM Registration for MSMEs: Government E-Marketplace
Disclaimer: Based on the Micro, Small and Medium Enterprises Development Act, 2006 (official text, not amended by the Jan Vishwas Acts of 2023 or 2026) and the Udyam notifications S.O. 2119(E) of 26 June 2020 and S.O. 1364(E) of 21 March 2025, read with later developments noted in the article, as on 30 September 2026. Notifications, rules and the Udyam portal change; verify the current position before acting.