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Defence MSMEs yet to benefit from key government's initiatives

Tags: Make in India, MSME, FDI, Radel Advanced Technology, Defence Acquisition Council

January 15, 2015 | COMMENTS ( 0 )

Defence MSMEs yet to benefit from key government\'s initiatives

The central government has created a staggering Rs 18,000 crore ($3 billion) opportunity for the Indian defence MSME by introducing 'Make in India' campaign and approving FDI in defence by upto 49 per cent from the previous limit of 26 per cent.

But, MSMEs in India, which exist in a large number in the defence segment, are yet to enjoy these key initiative by the government due to the lack of usage of technology and the inability to meet defence tender parameters. The FDI hike in defence is intended to cut imports by indigenising defence production as India is one of the world's largest arms importers.

"The Defence Acquisition Council (DAC) only handles procurement of major high value capital acquisitions, which are mostly beyond the reach of MSMEs," G. Raj Narayan, founder and MD, defence MSME firm Radel Advanced Technology, told IANS.

“The limiting factor for the success rate was the MSMEs' (micro, small and medium enterprises') lack of exposure to the high standards of quality, reliability, repeatability and traceability that form an essential characteristic of the defence sector,” he added further.

Similarly, Samtel Avionics (SA), a key Indian player in high-technology products for avionics and military applications in both domestic and international markets facing the same challenge.

"As a policy, MSMEs are allowed to participate in defence ministry tenders right from the Request for Information (RFI) stage. However, most of the RFI and Request for Proposal dealt with at the ministry and DAC require technical competencies that a single MSME may not have. This is one of the main reasons which prevent MSMEs from participating in DAC tenders," Puneet Kaura, executive director, Samtel Avionics told IANS.

The IANS report further states that though the ‘Make in India’ campaign can benefit the MSME companies in the defence sector, but a segment of MSMEs are doubtful about the roll-out of the centre's drive towards indigenisation.

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