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Govt doubles down on defence purchases from MSMEs; buys goods worth this much amount

The Financial Express logo The Financial Express 5 days ago Sandeep Soni

Ease of doing business for MSMEs: Purchase of defence-related goods and services by the Defence Ministry from MSMEs via the government’s business-to-government (B2G) portal Government eMarketplace (GEM) during the eight months of the current fiscal has surpassed FY22 procurement level, according to the portal. In a tweet on Thursday, GeM announced that the gross merchandise value of Rs 15,039 crore achieved in 12 months in the last fiscal has already been done in eight months of the current FY.  

“Defence buyers (are) looking forward to double their GMV this FY at this pace,” the tweet read. The FY22 procurement value was more than 250 per cent from the previous year, FE Aspire had reported earlier this year.

Importantly, the total MSME vendors supplying to the Defence Public Sector Units (DPSUs) increased to 10,506 till Q2 FY20 from 8,643 in FY19, and 7,591 in FY18, according to the data shared by the former MSME Minister Nitin Gadkari in Rajya Sabha in March 2020. By December 2021, the total count had jumped to 12,000. As a result, the procurement value by DPSUs from MSMEs jumped from Rs 4842.92 crore in FY19 to Rs 5463.82 crore in FY21 before leapfrogging in FY22. 

However, in the current half of FY23, the defence ministry wasn’t the top buyer of MSME products. Based on the public procurement monitoring portal MSME Samadhaan, as of September 6, the defence ministry was the fifth biggest buyer among various ministries.

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Ministry of Petroleum and Natural Gas led the pack with purchases from MSMEs worth Rs 7,332 crore since April followed by Ministry of Power with purchases made worth Rs 1,905 crore, Ministry of Steel (Rs 1,755 crore), and Ministry of Heavy Industries and Public Enterprises (Rs 1,323 crore). Ministry of Defence procured goods worth Rs 1,156 crore. 

For the uninitiated, MSMEs are also playing a key role in manufacturing 40 C-295 transport aircraft for the Indian Air Force. According to the government, over 125 MSME suppliers have been identified by a consortium of Tata companies including Tata Advanced Systems Limited (TASL) and Tata Consultancy Services (TCS) that will make these aircraft along with the European defence major Airbus.

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