In a firm pushback against what it saw as a misuse of government procurement privileges, the Supreme Court has sided with the Allahabad High Court’s decision to cancel a ₹37.92 crore cloud services deal handed to CloudThat Technologies—a company technically registered as a Micro and Small Enterprise (MSE) but functionally riding Amazon Web Services’ (AWS) coattails.
At the center of this dispute was a tender floated in March 2024 by the Directorate General of Hydrocarbons (DGH), aiming to modernize its National Data Repository. While Thoughtsol Infotech emerged as the lowest bidder after a rigorous technical and financial assessment, the contract was awarded to CloudThat under the price-matching clause meant to promote Indian MSMEs.
But there was a problem: nearly the entire scope of work—97%, to be precise—was going to be executed by AWS, a global giant not registered as an MSME in India. CloudThat, though officially the bidder, was only stepping in as a middleman, offering ancillary services like helpdesk support and migration assistance.
The Allahabad High Court didn’t mince words. It called out the setup as a clear circumvention of the MSME policy’s intent. “The bidder is not the real provider of cloud services,” the judges said, effectively concluding that CloudThat was acting as a proxy for AWS, rather than as an independent MSE delivering the contracted service.
Drawing from policy documents, FAQs, and the Micro, Small and Medium Enterprises Development Act of 2006, the Court emphasized that intermediaries and entities acting on behalf of foreign players are explicitly excluded from MSME benefits.
The High Court ordered DGH to go back to the drawing board and reevaluate the bids in compliance with the law—an instruction the Supreme Court found no fault with. In a brief dismissal of CloudThat’s appeal, the top court affirmed the lower court’s stance, ending the matter with a quiet but decisive nod.
The message is now loud and clear: MSME status cannot be a pass-through vehicle for foreign corporations to access public contracts designed to uplift small Indian businesses.
