Govt enhances funding under DRDO’s TDF scheme to Rs 50 crore for MSMEs, startups

Credit and Finance for MSMEs: The scheme intends to improve participation of public and private industries particularly MSMEs in order to create ecosystem for better technology capability for defence application.

msmes in defence
The total MSME vendors supplying to the Defence Public Sector Units (DPSUs) were 10,506 till Q2 FY20, up 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. (Image; pexels)

Credit and Finance for MSMEs: Defence Minister Rajnath Singh on Wednesday approved increasing the funding to MSMEs and startups under the Technology Development Fund (TDF) scheme of Ministry of Defence. The scheme, which supports indigenous development of components, products, systems and technologies, will now have an upper limit of Rs 50 crore per project from Rs 10 crore so far. 

Importantly, Finance Minister Nirmala Sitharaman in her budget speech had announced earmarking 25 per cent of defence R&D budget for private industry, startups and academia. Hence, the increase in financing is in line with the budget announcement and will give further support the government’s aim for self-reliance in the defence sector, defence ministry noted. 

The scheme intends to improve participation of public and private industries particularly MSMEs in order to create ecosystem for better technology capability for defence application. The financial support provided is covered via provision of grants-in-aid to the industry, according to the scheme’s details. While project cost of up to Rs 50 crore will now be considered for funding, it would be subject to a maximum of 90 per cent of the total project cost. 

Also, the scheme is limited to the development of technologies or prototype of product having potential use for the defence services with a typical development period of two years, the scheme noted.

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As of December 13, 2021, 37 projects costing Rs 191,19,28,932 have been awarded to various companies particularly MSMEs and startups under the scheme since its implementation in 2016 while total fund of Rs 28,51,45,680 was released to various developing agencies, according to a defence ministry statement in December last year. 

The total MSME vendors supplying to the Defence Public Sector Units (DPSUs) were 10,506 till Q2 FY20, up 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. In fact, purchase of defence products from MSMEs and others via the government’s business-to-government (B2G) portal Government eMarketplace (GEM) had jumped over 250 per cent in FY22 from the previous year. According to a statement by the ministry in April this year, procurement orders through GeM had reached an all-time high of Rs 15,047.98 crore during FY22.

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