‘Defence is a golden opportunity for MSMEs’ | SupportBiz

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‘Defence is a golden opportunity for MSMEs’

In the last couple of years, the defence sector has become the centre of attention for most policy makers and industry stakeholders for MSMEs. Specially after last year’s defence offset policy, a significant number of MSMEs have started focusing on the defence sector.

In a  recent development, AK Antony, Defence Minister, Government of India, re-emphasized that the new offset policy has enabled greater participation of the defence industry in India.

Addressing the International Seminar and Exhibition on Naval Armaments in New Delhi, Antony said, “Defence has become a lucrative opportunity for Indian MSMEs. The revised offset guidelines, which came into effect from August 2012, include multipliers to incentivize investment in MSMEs and facilitate technology acquisition. The Ministry of Defence has already taken a strong step of incepting a Defence Offset Monitoring Wing under the Defence Acquisition Council. This monitoring wing will ensure proper implementation of the offset policy. I hope that the offset, as a mechanism, will be fully utilized by the MSMEs. Foreign collaborations are also likely to influence the manufacturing sector.”

“The introduction of ‘Buy and Make (Indian)’ category in the defence procurement procedure is a step which can be considered  a landmark for Indian MSMEs. With the opening up of the defence sector in India to 100% Indian private sector participation, with FDI permissible up to 26%, I hope to see the industry gradually assuming the role of system integrator and manufacturer of complete defence equipment and systems,” Antony added.

The cabinet minister also emphasized on the need to focus more on R&D. He stated that  Indian SMEs must look at innovation and research as an integrated activity for their businesses.

Speaking at the event, Gurpal Singh, Principal Advisor & Head for Defence and MSMEs,  CII, said “We can foresee enormous opportunities for Indian and global companies to form joint ventures or collaborate to co-develop or co-manufacture products in India, not only for the Indian market, but for the global markets as well. This will not only reduce  import dependence, but  will also create entire system integration capabilities in both public and private sector companies in India.”

The National Small Industries Corporation (NSIC)  is aggressively working towards  spearheading MSMEs in order to achieve best possible results from the huge opportunities  existing in the defence sector.

Col. KV Kuber, Advisor on Defense,  NSIC,  stated, “At NSIC, we will take the responsibility of liaising with the government, and ensure proper dispensations of incentives to the MSMEs under the MSMED Act. We will also help MSMEs with regards to source funding and technology. Since the opportunities arising in   the Indian defence sector are  new to the industry, we are making  efforts to spread awareness about them. The changes in the  defence sector will bring forth a new era for Indian MSMEs. We are organizing workshops for MSMEs at various places in the country.”

Re-emphasizing  the fact that awareness is very important, Kuber  added, “We are closely working with  government agencies for clarifications, and facilitating the industry’s feedback. We have identified  two critical areas -  technology and funding support - for MSMEs in the defence sector.”

Nikhil Gandhi, Chairman, CII Defence Core Group on Strategic Projects,  and Chairman, Pipavav Defence and Offshore Engineering Company Limited, said, “There is a need to create a vibrant, indigenous defence manufacturing base in the country. The Ministry of Defence is becoming aggressive towards encouraging the industry to realign its business process for strategic alliances and joint ventures  while stepping up  R&D efforts, to remain globally competitive, especially in critical technology areas.”