Facilitate transfer of technology to SMEs: Secy MSME

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SME Times News Bureau | 31 Mar, 2012
The Ministry of Micro, Small and Medium Enterprise (MSME) Friday sought collaboration with the Defence Ministry to help small units get technology from larger companies, under Offset Policy, which would make small and medium enterprises (SMEs) more competitive.

"We have asked the Ministry of Defence for certain dispensations to be given for small and medium units. Offset (Policy) may include transfer of technology to such units. We are looking forward to a favourable consideration," Secretary in MSME Ministry R K Mathur said at an ASSOCHAM function in New Delhi.

The MSME Ministry has asked the Defence Ministry to facilitate transfer of technology to small units for enabling them to manufacture defence products.

Offset policy is part of Defence Procurement Procedure (DPP) under which foreign vendors bagging contracts worth over Rs 300 crore have to re-invest at least 30 percent of the money back into the Indian defence, homeland security and civilian aerospace sectors.

India has attracted Rs 18,000 crore investment under defence offset policy and another Rs 40,000 crore of obligations are in various stages of negotiations.

Besides, Mathur said, there is an opportunity in terms of indigenisation of different procurement done by the defence sector.

In November 2011, the government had approved a procurement policy under which state-run departments and PSUs will aim give preferences to micro and small entrepreneurs (MSEs), including those belonging to SCs/STs.

However, the government said that given defence sector's unique nature, defence armament imports will not be included in computing the 20 percent annual target for Ministry of Defence. Also, defence equipment like weapon systems, missiles will remain out of purview of such policy of reservation.

Further, Mathur said, the defence sector could explore the possibility of outsourcing its activities related to maintenance to small units.

Chief of army staff V.K. Singh, in his address, said the brief experience of defence industrial production shows that while it started from the scratch, it has not only been able to learn and absorb various technologies but also produce complex systems locally. But domestic production still constitutes only 30 per cent of the overall requirements.

“The industry must analyse the offset policy to deal with complexities of defence production and partnership with global companies, and suggest measures for it to become more effective,” he said adding foreign companies may not be easily forthcoming to part with critical technologies.

Meanwhile ASSOCHAM secretary general D.S. Rawat said any defence programme’s success or failure is because of the supply chain execution. It is precisely due to this that small and medium companies will play a critical role in the entire supply chain for aerospace and defence sector.

The country has been able to attract a meager Rs 18.6 crore in over ten years that defence sector opened up for foreign investments with a cap of 26 percent.