The realm of capital procurement for Defence equipment is undergoing a transformative phase driven by the Defence Acquisition Procedure (DAP 2020), firmly grounded in the ethos of “Atmanirbhar Bharat” or “Self-Reliance.”
This visionary approach underscores indigenization, innovation, and import substitution, creating an ecosystem that thrives on domestic industry, particularly Micro, Small, and Medium Enterprises (MSMEs). The Make in India initiative, is an endeavour that not only galvanizes the defence supply chain but also ushers in a new era of self-sufficiency.
In its resolute pursuit of self-reliance, the Government has championed policies to bolster MSMEs in the defence sector. This information was given by Minister of State Defence Ajay Bhatt in a written reply to Lok Sabha on Friday.
Integral to these initiatives are provisions within DAP that empower MSMEs and Start-ups, elevating their role in shaping the nation’s defence landscape.
Reserved Delegated Cases:
For cases with AoN (Acceptance of Necessity) cost up to Rs 100 crores, MSMEs are given priority, especially when multiple eligible entities exist in this category.
Start-up/MSME Financial Relaxation:
Financial parameters are adjusted for recognized Start-ups and MSMEs, acknowledging their distinctive contributions.
EMD Waiver for MSEs:
Recognized Micro and Small Enterprises (MSEs) are exempted from the requirement of Earnest Money Deposit (EMD), streamlining their participation.
Financial Eligibility Relaxation for MSMEs:
Make-1 projects open doors for MSMEs by relaxing financial eligibility criteria.
Beyond these measures, the ecosystem is fortified through initiatives like the Innovations for Defence Excellence (iDEX) under the Defence Innovation Organisation (DIO) and the Technology Development Fund (TDF) by DRDO. By embracing innovators, technocrats, professionals, academicians, and smaller enterprises, including start-ups and MSMEs, these initiatives foster a strategic and integrated approach to innovation.
A pivotal game-changer has been the Defence Offset guidelines, which award a multiplier of 1.5 to MSMEs as Indian Offset Partners (IOP), amplifying their global integration and participation in the supply chain.
Reflecting on the past five fiscal years (2018-19 to 2022-23), the statistics bear testament to the success of this approach. Among the 239 capital acquisition contracts signed for defence items/equipment, an impressive 68% of these contracts, totaling 168, have been inked with Indian vendors, of which MSMEs are an indispensable part.
In sum, the armed forces’ procurement landscape has undergone a paradigm shift, amplifying India’s self-reliance narrative. The strategic synergy of DAP provisions, supportive policies, and collaborative initiatives is not just a procurement strategy; it’s a powerful testament to India’s capability to stand tall among the global leaders in defence innovation and self-sufficiency.