Date:27/08/2005 URL: http://www.thehindubusinessline.com/2005/08/27/stories/2005082702511900.htm

Back SMEs to gain from procurement policy for defence sector

Our Bureau

Hyderabad , Aug. 26

SMALL and medium enterprises (SME) sector, particularly those catering to the defence and aerospace segments, are in for a major boost, with the Centre finalising a long-term procurement policy for defence purposes.

The strategy would identify areas where private sector could be involved more.

This was part of the Government's strategy to achieve 70 per cent self-reliance by the year 2020, Ms Shila Bhide, Financial Advisor to the Ministry of Defence, said.

Addressing the inaugural of a three-day SME expo here on Friday, she said the idea was to achieve self-reliance in defence preparedness and bring down imports to reduce foreign exchange outflows.

The expo is being organised by FAPSIA (Federation of Andhra Pradesh Small Industries Association), where SMEs, defence and public sector undertakings put up stalls.

The scope for the sector was tremendous as defence PSUs outsource products worth Rs 5,438 crore and Ordnance factories Rs 3,756 crore.

Mr Prahlada, Director of DRDL (Defence Research and Development Laboratories), said SMEs contributing to defence and aerospace segments were expected to get outsourcing contracts to the tune of Rs 1,000 crore annually in the next 10 years.

"The focus has been more on very high-value and low volume products," Mr Prahlada said.

Delivering the keynote address at the inaugural of the three-day SME expo organised by FAPSIA here on Friday, he advised the small sector to form consortiums so that they could share facilities and expertise.

"They should have integrated planning and common facilities," he said.

Stating that the sector had come a long way in contributing to the defence and aerospace sectors, he said a new wave was taking place in this sector.

Adoptive, well-connected and knowledgeable entrepreneurs have led the sector to graduate into a higher orbit.

The Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, told the industry that the Government would provide incubation facilities, if needed.

He said the State Government would provide a level-playing field to the industry by offering quality and affordable power.

"We have already reduced power tariff by 16-17 paise. We will further reduce it in the next two-three years," he said.

Commending the growth of SMEs, he said SMEs contribution to the State's economy was significant.

But it could not grow in the past few years for various reasons.

"Economy cannot become buoyant unless SMEs do well," he said.