Lok Sabha Question No. 6080 (UNSTARRED), answered on 2018-04-04
Subject: MSMEs in Defence Sector
Ministry: DEFENCE
Asked by: GAURAV GOGOI, JYOTIRADITYA MADHAVRAO SCINDIA

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA UNSTARRED QUESTION NO.6080

TO BE ANSWERED ON THE 4 TH  APRIL, 2018

## MSMEs  IN  DEFENCE  SECTOR

6080.  SHRI  GAURAV  GOGOI: SHRI  JYOTIRADITYA  M. SCINDIA:

Will the Minister of DEFENCE j{kk ea=h be pleased to state:

- (a) whether the Government proposes to help Micro, Small and Medium Enterprises to venture into the defence sector globally;
- (b) if so, the details in this regard;
- (c) whether  the  Government  proposes  to  put  in  place  the  integrated  Research  and Development (R&D) programme with the help of industries and educational institutions to enable the MSMEs to compete in the defence sector globally; and
- (d) if so, the details thereof and the other steps taken or being taken in this regard?

## A    N    S    W    E    R

MINISTER OF DEFENCE                                    (SMT. NIRMALA SITHARAMAN)

j{kk ea=h

¼Jherh  fueZyk lhrkje.k )

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(a) to (d): A Statement is attached.

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## STATEMENT  REFERRED TO  IN  REPLY  TO  PARTS  (a)  TO  (d)  OF  LOK  SABHA UNSTARRED QUESTION NO. 6080 FOR ANSWER ON 4.4.2018

(a) & (b): The Defence Production  Policy  aims  at  achieving  substantive  selfreliance  in  the  design,  development  and  production  of  equipment,  weapons systems, platforms required for defence through several measures which, inter alia include enhancing the potential of SMEs in indigenisation.

The  preamble  to  the  Defence  Procurement  Procedure  (DPP)  -  2016, specifically  mentions  that  enhancing  the  role  of  Micro,  Small  and  Medium Enterprises (MSMEs) in the Defence Sector is one of the defining features of DPP. Following  specific  provisions  have  been  introduced  in  DPP-2016  that  would increase the participation of MSMEs in the defence sector:

- (i) In 'Make' category of capital acquisition, Government funded projects with  estimated  cost  of  prototype  development  phase  not  exceeding Rs.10  crore  and  Industry  funded  projects  with  estimated  cost  of prototype development phase not exceeding Rs.3 crore are reserved for MSMEs.
- (ii) In addition, it has been mandated to involve MSME associations while carrying out feasibility studies for 'Make' projects.  MSMEs have also been granted relaxation in the registration and profitability criteria for consideration as eligible 'Indian Vendor' for participation in the 'Make' projects.
- (iii) In  the  discharge  of  offset  obligations,  a  multiplier  of  1.50  will  be permitted where MSMEs are Indian Offset Partners (IOPs).

(c) & (d): Government  has set  up  the  'Technology  Development  Fund  (TDF)' scheme  under  Make  in  India  initiative.    The  funding  is  provided  through provisions of grants to public and private sector industry especially MSMEs that may work in collaboration with the academia or research institutions to carry out innovation,  research  and  development  with  a  limit  of  Rs.10  Crore  per  project. Two  projects  have  been  awarded  to  SMEs  under  this  scheme  as  per  details below:-

|   S. No. | Name of requirement                                                                                | Name of SMEs                                                                       | Project Cost                    | State       |
|----------|----------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|---------------------------------|-------------|
|        1 | Video Processing / Switching Board for an Advance Military Aircraft with ARINC 818 Std Capability. | Logic Fruit Technologies Pvt. Ltd.                                                 | INR 517 Lakh + Applicable Taxes | Haryana     |
|        2 | Composite Material Sea Water Pumps (40 TPH & 125 TPH).                                             | Zeus Numerix Pvt. Ltd. in association with Eternus Performance Materials Pvt. Ltd. | INR 485 Lakh + Applicable Taxes | Maharashtra |