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MSME & START-UP BULLETIN, VOLUME 1, ISSUE 1, AUGUST 2022

Defence Industrial Corridors. obtaining quality certifi cations and industrial
licenses.
5. Special reservations for MSME in the Make
procedures and supply to the defence. 6. Lack of technical know-how and expertise.

6. Setting up iDEX (Innovations for Defence 7. Lack of clear policy and organised handholding.
Excellence) to foster innovation and
technological development in Defence and 8. Government needs to improve the competitiveness
Aerospace paved way for start-ups, MSMEs, of the MSMEs and enhance their role in defence
individual Innovators, R & D institutes and manufacturing.
academia by providing funds and other support
to carry out research and development having 9. Inability to access the international markets to
future potential for adoption. become global supply chain partners.
7. The recent amendments in the Defence Offset 10. Lack of funding facilities which is the perennial
guidelines facilitated MSMEs as Indian Offset cause of sickness of MSME in general.
Partners (IOP) thereby integrating them in global
supply chain. 11. High security requirements related to defence
products add to the costs for MSMEs as the
8. Department of Defence Production regularly defence products are lethal in nature.
conducts the outreach programmes in Tier- II
and Tier III cities to spread awareness about 12. Quality Assurance and reliability are the key
export opportunities in defence manufacturing. to defence production. There are stringent
benchmarks related cost, quality and delivery.
9. Defence Investor Cell is constituted to address The major concern especially for MSMEs is to
the issues and grievances of vendors at DPSUs, target zero defect in defence manufacturing.
especially MSME vendors.

10. Under Make-III, MSMEs can form Joint Venture V. Prerequisites for Defence MSME
with foreign Original Equipment Manufacturer When a non-defence MSME wishes to enter in to
(OEMs) to manufacture components, equipment defence manufacturing, it should identify the right
or platforms not designed in India. opportunity, build the infrastructure and team, secure
the initial order, get the required certifi cations to move
IV.Challenges for MSME in Defence up in the value chain. Making in India brings down the
manufacturing production costs and offers abundant opportunities. It
The Ministry of Defence rolled out various measures is important to integrate small businesses into global
to support indigenisation of defence manufacturing. supply chains for consolidation of benefi ts offered
MSMEs are expected to play a vital role given the in government policy initiatives. Other than meeting
policy thrust. Yet India faces several challenges in its the quality standards for the manufacture of defence
journey towards self-reliance, though manufacturing products, MSMEs must comply with the following
locally will fuel economic development in the long run. mandatory requirements:
Due to factors mentioned below functioning of MSMEs
in defence manufacturing are hindered: I. Registration of MSME as per MSME Act, 2006.
2. A Company should be a registered Company
1. Absence of proper documentation with MSME to be eligible as Indian vendor under Defence
which, in turn, affect the quality of products.
Procurement Procedure (DPP) 2016.
2. Lack of regularity of orders from defence forces. 3. ISO Certifications required to ensure
minimum standards of quality. For aerospace
3. Non-availability of superior technology and manufacturing, AS9100 quality certifi cation is
operation ineffi ciencies.
required.
4. Lack of understanding of Defence Procurement 4. Additional security safeguards as specifi ed by
Process. the government are required to be put in place
for the Indian licensed defence companies.
5. Lot of legal formalities are involved such as

The Institute of Cost Accountants of India 21