Lok Sabha Question No. 5495 (UNSTARRED), answered on 2018-03-28
Subject: Encouragement to SMEs
Ministry: DEFENCE
Asked by: RAJESH PANDEY, MOHANBHAI KALYANJIBHAI KUNDARIYA

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE

## DEPARTMENT OF DEFENCE PRODUCTION

## LOK  SABHA UNSTARRED QUESTION NO.5495

TO BE ANSWERED ON THE 28 TH  MARCH, 2018

## ENCOURAGEMENT  TO  SMEs

5495.  SHRI  RAJESH PANDEY:

SHRI  KUNDARIYA  MOHAN  BHAI  KALYANJI  BHAI:

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

- (a) the  contribution  of  Micro,  Small  and  Medium  Enterprises  (MSMEs)  sector towards indigenous manufacturing in defence sector under Make in India programme in the country at present;
- (b) whether the Government has fixed any target in this regard and if so, the details thereof;
- (c) whether  the  Government  is  encouraging  the  Small  and  Medium  Enterprises (SMEs) in engineering sector for defence supply under Make in India;
- (d) if so, the details of the SMEs which have bagged the contract and the quantum of products supplied or to be supplied along with the net worth of the contract etc., Statewise; and
- (e) the details of the steps taken by the Government to increase the participation of SMEs  contribution  in  engineering  sector  by  way  of  simplifying  the  procedures  for defence supply and if not, the reasons therefor?

## A    N    S    W    E    R

MINISTER OF STATE

IN THE MINISTRY OF DEFENCE

र  ा रा य मं ी

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

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(DR. SUBHASH BHAMRE)

(डा. सुभाष भामरे)

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  LOK  SABHA UNSTARRED QUESTION NO. 5495 FOR ANSWER ON 28.3.2018

- (a) The  contribution  of  MSEs  towards  total  domestic  procurement  from vendors by  OFB / DPSUs during the last three years is as follows:-

| Financial Year   |   Procurement from MSEs by DPSUs / OFB (Rs. in Crore) |
|------------------|-------------------------------------------------------|
| 2014-15          |                                               3301.17 |
| 2015-16          |                                               3701.08 |
| 2016-17          |                                               4256.93 |

(b) & (c): The  Government  has  notified  Public  Procurement  Policy  for  Micro and  Small  Enterprises  (MSEs),  Order,  2012  under  MSMED  Act,  2006  which  is effective from 1 st April, 2012.  It has become mandatory w.e.f  1 st April 2015.  The Policy  has  set  an  annual  goal  for  procurement  from  the  MSE  sector  at  the beginning of the year, with the objective of achieving an overall procurement goal of minimum 20 per cent of the total annual purchases of the products or services produced or rendered by MSEs from the latter, in a period of three years.  Out of 20% target of annual procurement from MSEs, a sub-target of 4% (i.e. 20% out of 20%)  will  be  earmarked  for  procurement  from  MSEs  owned  by  SC  /  ST entrepreneurs.  However, in the event of failure of such MSEs to participate in the tender  process  or meet  the tender  requirements and the L1 price,  the  4% subtarget for procurement earmarked for MSE owned by SC / ST entrepreneurs will be met from other MSEs.

- (d) The States / UT wise data on procurement from MSMEs is not maintained in the Ministry.

(e) 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).
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