Armed forces should buy defence items from MSMEs: Assocham

Assocham today demanded a defence procurement policy that makes it mandatory for armed forces to source 10 per cent of their annual purchases of articles like uniforms, belts, shoes and components for vehicles from MSMEs.     

A survey of about 400 micro, small and medium enterprises (MSMEs) executives done by the chamber said the Prime Ministers Office should intervene in the matter.     

"Over 85 per cent of the executives demanded a defence procurement policy that makes it mandatory for armed forces to source 10 per cent of their annual purchases from MSME's as their quality and delivery schedule is now on par with large industries," it said.  

 

Defence Ministry spends about Rs 7 billion annually on defence procurements, of which virtually nothing is procured from MSME's, it added.     

Right now there is no policy to procure supplies of defence articles from MSME's and all possible domestic defence purchases and procurements are directly sourced from large industries which, Assocham said, is totally unfair.

The survey further said that the RBI should ask commercial banks to at least advance 6 per cent of their net credit for MSME's under their priority sector lending norms.     

Under RBI guidelines, 40 per cemt of commercial banks' net credit in a year is supposed to be utilised under priority sector.