New Delhi, Nov 1 (IANS): The government Tuesday gave its nod to a procurement policy under which 20 percent of goods purchased by central ministries and public sector undertakings would be from micro and small enterprises (MSEs).

The decision, to provide MSEs an assured growth opportunity, was taken by at a cabinet meeting chaired by Prime Minister Manmohan Singh here.

Giving details, MSE Minister Virbhadra Singh told reporters here that the policy would become mandatory three years from now.

Government departments not conforming to the mandatory procurement would be required to provide reasons to a review committee set up for the purpose, he said.

MSEs include the khadi, village and coir industries; they constitute a major part of the sector that contributes significantly to GDP, manufacturing output and exports, a policy note for the cabinet said.

Under the policy, every central ministry and PSU will set an annual goal for procurement from the MSE sector at the beginning of the year with the objective of achieving overall procurement goal of minimum 20 percent of the total purchases of products and services from the MSEs.

Of the 20 percent target, a sub-target of four percent -- that is 20 percent of the 20 percent -- would be earmarked for procurement from the MSEs owned by SC/ST entrepreneurs, Virbhadra Singh said.

"However, in the event of failure of such MSEs to participate in the tender process or meet the tender requirements and the L1 price, the four percent sub-target for procurement earmarked for MSEs owned by SC/ST entrepreneurs will be met from other MSEs," he added.