Defence ministry nearly doubles its purchases worth crores from MSMEs in FY23; check details

Ease of doing business for MSMEs: The growing defence procurement from MSMEs assumed significance as India has been enhancing its defence capabilities over the years. As a result, the government had enhanced allocation in the defence budget to Rs 5.94 lakh crore for FY24 from Rs 5.25 lakh crore in FY23.

Written by Sandeep Soni

April 13, 2023 14:10 IST

defence ministry, defence procurement, purchase of defence goods and services, gem, government emarketplace, public procurement, gem marketplace, ecommerce

Apart from orders, MSME vendors selling to the defence units in the government had also increased.

Ease of doing business for MSMEs: The Ministry of Defence, which is among the largest buyers of products from micro, small and medium enterprises (MSMEs), has nearly doubled its online procurement of goods and services from MSMEs and other sellers in the financial year 2022-23 from the previous fiscal via the Government e-Marketplace (GeM) marketplace. The ministry made purchases worth Rs 28,732.9 crore in FY23, up by 90.4 per cent from Rs 15,090.8 crore worth of goods and services bought in FY22, according to GeM.

Over the years, Ministry of Defence has exhibited tremendous growth in public procurement. The Ministry has procured goods and services worth ₹28,732 Crore in FY22–23, an increase of almost 90% compared to the previous Financial Year. Congratulations @DefenceMinIndia! pic.twitter.com/Ql3Puddk1v
— GeM (@GeM_India) April 13, 2023

Also read: Govt doubles down on defence purchases from MSMEs; buys goods worth this much amount

In fact, the defence ministry topped among all ministries in MSME procurement in the calendar year 2022. “At number one in procurement, the Ministry of Defence has reached an all-time high. Reaping the benefits of cost efficiency and speedy procurement, the ministry has purchased products and services worth Rs 16,747 crore in 2022 from the portal,” GeM had tweeted earlier.

Apart from orders, MSME vendors selling to the defence units in the government had also increased. The total MSME vendors supplying to the Defence Public Sector Units (DPSUs) had jumped to 10,506 till Q2 FY20 from 8,643 in FY19, and 7,591 in FY18, according to the data shared by the former MSME Minister Nitin Gadkari in Rajya Sabha in March 2020. By December 2021, the total count had jumped to 12,000.

The growing defence procurement from MSMEs assumed significance as India has been enhancing its defence capabilities over the years. As a result, the government had enhanced allocation in the defence budget to Rs 5.94 lakh crore for FY24 from Rs 5.25 lakh crore in FY23. This included Rs 1.62 lakh crore allocated for capital expenditure that included the purchase of military hardware, new weapons, aircraft, etc.

Also read: SIDBI signs MoU with aerospace body SIATI to benefit MSMEs in aerospace, defence

As a major thrust to MSMEs’ capabilities, over 125 Indian MSME suppliers were identified in October last year by a consortium of Tata companies including Tata Advanced Systems Limited (TASL) and Tata Consultancy Services (TCS) that will make 40 C-295 transport aircraft for the Indian Air Force along with the European defence major Airbus.

The ministry had noted that the manufacturing of over 13,400 detail parts, 4,600 sub-assemblies and all the seven major component assemblies will be undertaken in India, along with tools, jigs and testers in India, giving impetus to MSMEs.