New Delhi, May 24 (KNN) The ‘Strategic Partnership’ model was approved by the Defence Acquisition Council (DAC) last week, however, the exact role of MSMEs for work share is yet to be defined.

The government will reportedly discuss the matter in the Cabinet Committee on Security (CCS) meeting scheduled to be held today.

DAC has been saying that MSMEs will play a ‘major role’ in the Defence Ecosystem in the country. But how MSMEs will be involved in the Defence industry value chain is yet to be clarified.

The past experiences with defence PSUs, including the Ordnance Factory Board, Hindustan Aeronautics and the shipyards, have shown very little work being outsourced.

In the new policy cleared by the DAC, four segments have been approved in Phase I, including 6 submarines under Programme P 75 valued at Rs 60,000 crore, with OEM in contention French companies, including DCNS and ThyssenKrupp. On the Indian side, the two SP contenders would be Reliance Defence and Engineering (RDEL) and L&T.

MSMEs participation has been minimal in the past. Expanded role for the sector will not only be a step forward in building ecosystem of vendors and promoting the indigenous manufacturing industry but would also encourage Technology Transfer and job creation in the sector.

This will be in line with the present government’s commitment to boost Make in India and promote domestic manufacturing industry.

Commenting on the development, an expert in MSME affairs said that while the Defence Procurement policy 2016, mention about reserving projects upto Rs. 10 crore for the MSMEs, how it will be dovetailed with the strategic partner initiative, is not clear.

“The OEM partner of the SP will always be comfortable with sourcing of the components from its global vendors; unless Government force the alliance to procure  at least a certain percentage of the contract value from  Indian MSMEs”, he quipped. (KNN Bureau)