India launches defence MSME promotion scheme

The export division of the Indian Ministry of Defence's (MoD's) Department of Defence Production (DDP) has launched a scheme to encourage domestic micro, small, and medium enterprises (MSMEs) to enter the country's defence sector.

The DDP said in a notice on 10 June that the scheme will involve a series of events across the country to facilitate and incentivise some of India's estimated 63 million MSMEs to contribute to national defence research, development, and manufacturing activities.

“MSMEs will be educated about the requirements and expectations of the defence sector and the enabling provisions introduced by the government to incentivise them,” said the notice in reference to the MSME events that will be starting soon – albeit dependent on the Covid-19 situation – in cities with high numbers of such firms.

In March India's minister of state for defence Shripad Naik said that the MoD had procured defence equipment from MSMEs worth INR305 billion (USD4.17 billion) in the past three fiscal years. The figure is estimated by Janes to be equal to about 10% of total procurement funding during that period.

In a parliamentary reply given in March 2020, Nitin Gadkari, the minister for MSMEs, said the total number of MSMEs operating in the defence sector had reached 10,506 by the second quarter of fiscal year 2019–20.

According to figures provided by Gadkari, this represented a jump of 22% compared with the whole of the previous fiscal year. He said the number of MSMEs operating in the defence sector in 2018–19 was 8,643, while one year earlier it was 7,591.