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COVID19: Defence manufacturing adversely affected, says Rajnath

Defence manufacturing is one sector that has been affected the most due to COVID-19 though now is the time we turn to make ‘Local’ focal and achieve self-reliance, said the defence minister

  • SIDM organised e-conclave on the theme ‘Business Continuity for MSMEs in Defence & Aerospace Sector’ in which 800 MSMEs participated

  • Rajnath Singh termed MSMEs backbone of Indian Economy and reiterated upon the goal of self-reliance in defence manufacturing

New Delhi: “Defence manufacturing sector has been affected the most due to lockdown and disruption in existing supply chains and the defence sector is no exception to this. Rather, it can be said that the defence sector is more aggravated than other sectors as the only buyer of defence products is the government” said Defence Minister Rajnath in an MSME e-conclave jointly organised by Society of Indian Defence Manufacturers (SIDM), Confederation of Indian Industry (CII) and Department of Defence Production. SIDM & KPMG also released a report titled “MSME, the Untapped Force Multiplier for the Indian Defence Sector” during the conclave. Rajnath Singh appreciated the role played by SIDM and other MSMEs in India’s fight against COVID-19 pandemic.

“There are more than 8,000 MSMEs, tiered partners of many of our organisations - Ordnance factories, DPSUs and service organisations. They contribute more than 20 percent of the total production of these organisations” Singh said mentioning MSMEs as the backbone of the Indian economy that accelerates GDP growth, earn valuable foreign exchange through exports and provide employment opportunities. 

The theme of the e-conclave was ‘Business Continuity for MSMEs in Defence & Aerospace Sector’ in which more than 800 Defence MSMEs participated.

Acknowledging the hardships faced by the defence industry, the Minister said, “Manufacturing sector has been affected the most due to lockdown and disruption in existing supply chains and the defence sector is no exception to this. Rather, it can be said that the defence sector is more aggravated than other sectors as the only buyer of defence products is the government.” The SIDM has conducted many interactions with senior officials of the Ministry and the Armed Forces since the lockdown came into force. This has given an opportunity to get to know the problems of defence industries and many suggestions for their prevention have also been received from SIDM.

“There are more than 8,000 MSMEs, tiered partners of many of our organisations - Ordnance factories, DPSUs and service organisations. They contribute more than 20 percent of the total production of these organisations”- Rajnath Singh, Minister of Defence

To tackle these challenges, MoD has taken several steps such as an extension of response dates of RFP/RFI, early clearance of pending payments, etc. In this crisis, several financial support measures have been announced by the Government and RBI to reduce the financial burden of the industries. These will provide some relief due to the availability of additional working capital, deferment in interest payments. Singh assured that the 'Aatma Nirbhar Bharat' campaign, inspired by PM Modi will provide many opportunities to Indian industry and will help in restoring millions of jobs. He said, “PM has called for being 'vocal for local' in this direction. I would like to say that we have to have our indigenous products, ie 'vocal for local', but before that in our own life, 'local' has to be focal. That is, we have to adopt 'swadeshi' products in our life. There is no doubt that MSMEs have a very important role in the goal of indigenous manufacturing, and in the goal of self-reliant India.”

Singh mentioned some of the measures announced by Finance Minister Nirmala Sitharaman under ‘Aatma Nirbhar Bharat’ scheme. Collateral free loan of 3 lakh crores for MSMEs - this will be effective in re-establishing about 45 lakh units and saving employment. Subordinate debt provision of Rs 20,000 crore has been announced for two lakh MSMEs, this will help stressed MSMEs. Equity infusion of Rs 50,000 crore will be provided through ‘Mother-Daughter Fund’ for the purpose of benefiting the needy MSMEs. A Rs 10,000 crore 'Fund of Funds' will be set up to help increase the capacity of these units and for marketing.

“We have taken several measures to alleviate the hardships faced by defence manufacturing industry due to COVID-19, the DPSUs have been asked to clear payments of MSMEs, also their production targets have not been scaled down. The measures taken by the government in recent times will help realise the target of achieving a USD 25 billion defence production by 2025” - Raj Kumar, Secretary (Defence Production)

The definition of MSME has been revised so that MSMEs can be expanded. At the same time, there will be no distinction between manufacturing and services sector MSMEs. In government contracts (procurements) of value Rs 200 crores or less, global tenders will not be allowed. This will help MSMEs to grow their business. In the event of being unable to participate in trade fairs due to COVID-19, e-market linkages will be ensured. Government and PSUs will also ensure the clearance of all outstanding payments in the next 45 days.

Chief of Defence Staff General Bipin Rawat, Secretary (Defence Production) Raj Kumar, President of SIDM Jayant D Patil, former president Baba N Kalyani, DG-CII Chandrajit Banerjee took part in the e-conclave along with the senior civil and military officials of MoD, OFB, Defence PSUs and around 800 MSMEs.