The Hindu : Defence supplies: SMEs promised help

Online edition of India's National Newspaper
Thursday, May 02, 2002

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Defence supplies: SMEs promised help

By Our Special Correspondent

NEW DELHI MAY 1. The Ministry of Defence today promised that it will help remove price disadvantage affecting the small and medium enterprises (SMEs) to provide a level playing field to the domestic industry in defence supplies.

In this respect, the Ministry is seeking the Finance Ministry's intervention to fine-tune Customs duties, the Special Secretary in the Ministry of Defence, Ajay Vikram Singh, said while addressing a seminar on opportunities for SMEs in the defence sector, organised by the Associated Chambers of Commerce and Industry of India (Assocham).

Mr. Singh said this was necessary to avoid the disadvantage the indigenous industry faced. By complying with taxes, their products were rendered uncompetitive. The imported products did not attract Custom and counter-vailing duty. While there was no price preference for PSUs, the policy of purchase preference would not affect the SMEs in meeting the requirements of the defence industry, he added.

After the opening up of all areas in defence production for private participation, opportunities had arisen for the SMEs in supply of civil equipment such as clothing and vehicles, ancillaries for major product manufacturers, supply support for major imported systems and exports.

Responding to the observations by the Assocham president, K.K. Nohria, Mr. Singh said the SMEs had certain distinctive characteristics such as flexibility, diversity and low-cost inputs, which made them highly competitive as producing units, and the present global economic trends of knowledge, innovation, downsizing, networking, globalisation and decapitalisation which reduced the gap that once separated large enterprises and SMEs.

Mr. Nohria pointed out that the country's defence must have a two-tiered programme: continue to embrace new technologies and with the help of scientists and engineers, imbibe them into the system and maintain, replace and meet regular requirements of the varied defence items in demand so that the country's dependence on foreign imports was progressively reduced. Assocham members said they saw opportunities for the SMEs in contract manufacturing, sub-contracting manufacture of electronic equipment and design and solution providers. They suggested designation of defence equipment supplies by local manufacturers as deemed exports and called for simplification of procedures such as tenders and supply order forms.

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