Lok Sabha Question No. 3894 (UNSTARRED), answered on 2023-08-11
Subject: Procurement of Items for Armed Forces
Ministry: DEFENCE
Asked by: Poonam (Mahajan) Vajendla Rao, Ramya  Haridas

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE

## LOK SABHA UNSTARRED QUESTION NO. 3894

TO BE ANSWERED ON 11 th  August, 2023

## PROCUREMENT OF ITEMS FOR ARMED FORCES

3894.   SHRIMATI POONAM MAHAJAN: MS. RAMYA HARIDAS:

Will the Minister of DEFENCE be pleased to state:

(a) whether the Government is procuring things/items for the armed forces and establishments in defence from Micro, Small and Medium Enterprises (MSME) with a view to promote the MSME Sector in the country;

- (b) if so, the details thereof;

(c) the purchases/acquisitions made for armed forces and establishments in defence during the last five years, year-wise; and

(d) if not, the reasons therefor?

## A  N  S  W  E  R

MINISTER OF STATE IN THE MINISTRY OF DEFENCE

(SHRI AJAY BHATT)

(a) & (b):  Yes, Sir. Capital procurement of Defence equipment is carried out as per Defence Acquisition Procedure (DAP 2020) with a focus on 'Atmanirbhar Bharat' i.e 'Self Reliance' wherein indigenisation, innovation and import substitution has been facilitated through various schemes to build a robust ecosystem based on domestic industry including Micro, Small and Medium Enterprises(MSME).  One of the key objectives  of Make in  India initiative  of  the Government is to bring MSMEs and Startups into the defence supply chain and thereby boost self reliance.

The Government has taken several policy initiatives for promotion of MSMEs in defence and some of the DAP provisions enabling participation of MSMEs/Startups are as under: -

-  Reservation of delegated cases with AoN cost up to Rs. 100 crores for MSMEs, provided there are at least two or more MSMEs eligible to participate in the category
-  Relaxation of financial parameter for recognised Start-ups/MSMEs.
-  Waiver of EMD requirement from recognised Micro and Small Enterprises (MSEs)
-  Relaxation in financial eligibility criteria for MSMEs for MAKE-1 projects.

-  Setting  up  Innovations  for  Defence  Excellence  (iDEX)  initiative  under  the  Defence Innovation Organisation (DIO) and Technology Development Fund (TDF) under DRDO to use a multi-pronged approach and engage a large pool of innovators/technocrats/professionals/academicians including amongst the smaller enterprises,  start-ups  and  MSMES,  to  foster  innovation  in  a  coherent,  strategized,  and integrated manner.
-  The Defence Offset guidelines have further paved the way for proactive participation of MSMEs of India by incorporating a scheme of multipliers of 1.5 for engaging MSME as Indian Offset Partners (IOP), which promotes their integration in global supply chain.
- (c) & (d):  During last five financial years (2018-19 to 2022-23), 239 capital acquisition contracts have  been  signed  for  procurement  of  defence  items/equipment.  Out  of  which,  168  contracts accounting  for  68%  of  total  contracts  value  have  been  signed  with  Indian  vendors  including MSMEs. Year wise details of capital contracts signed with domestic vendors are as under: -

|   Sl. No | Year    |   No of contracts |
|----------|---------|-------------------|
|        1 | 2018-19 |                30 |
|        2 | 2019-20 |                38 |
|        3 | 2020-21 |                34 |
|        4 | 2021-22 |                30 |
|        5 | 2022-23 |                36 |

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