Ease of Doing Business for MSMEs: Defence procurement from micro and small enterprises (MSEs) hit a record high during the financial year 2021-22, showed government data. Purchase of general goods and services from MSEs including SC/ST and women-owned units during the year increased 33.8 per cent to Rs 5,760 crore from Rs 4,303 crore in FY21. In comparison to pre-Covid, FY22 procurement jumped 79.7 per cent from Rs 3,204 crore during FY20 amid the government’s aim to enhance self-reliance in defence production by promoting local defence manufacturing units including MSEs. The total value of Indian defence exports during FY22 reached Rs 12,815 crore vis-a-vis Rs 8,435 crore in FY21 and Rs 9,116 crore in FY20.
Sharing data in the Rajya Sabha on Monday in a written reply to a question on defence purchases from MSMEs, Minister of State for Defence Ajay Bhatt said MSMEs are important partners in the Defence Research and Development Organisation’s (DRDO) projects and DRDO transfers technologies to them.
“DRDO through its scheme Technology Development Scheme (TDF) funds industries, especially startups and MSMEs up to an amount of Rs 10 crore for innovation, research and development of defence technologies in the field of defence and aerospace,” said Bhatt.
The defence procurement from MSEs in the current year, as of July 26, amounted to Rs 759 crore.
Defence purchases via the government’s business-to-government (B2G) portal Government eMarketplace (GEM) had also recorded a significant jump of over 250 per cent in FY22 from the previous year. According to a statement by the ministry in May this year, procurement orders through GeM had reached an all-time high of Rs 15,047.98 crore during FY22.
The number of MSME vendors supplying to the Defence Public Sector Units (DPSUs) has also increased. From 7,591 in FY18 and 8,643 in FY19, the number went up to 10,506 till Q2 FY20, former MSME Minister Nitin Gadkari informed Rajya Sabha in March 2020. By December 2021, the total MSME count in defence PSUs spiked to 12,000.
“MSMEs started their journey with DPSUs as their supply chain partners but today, they have come up to a level where they are playing an important role in discharging offset obligations, revenue procurement, and also in designing, developing, and manufacturing complete defence systems by themselves,” said Dr Mayank Dwivedi, Director, Industry Interface & Technology Management (DIITM), DRDO at an event organised by PHD Chamber of Commerce and Industry in March this year.
Importantly, the government had introduced ‘MAKE Projects’ in Defence Acquisition Procedure (DAP) 2020 to facilitate indigenous design and development of defence equipment both with government funding and industry funding.