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Enhancing the Role of SMEs in Defence Production

India is one of the world’s top ten countries in terms of military expenditure. According to the database prepared by the Stockholm International Peace Research Institute, which has listed the countries of the world in terms of their military expenditure at current US$ millions in 2013, Indian ranks 9th. With spending in Defence and Aerospace on the rise in India, it is estimated to become the third largest market by 2020, after the US and China. Increasing passenger traffic and military expenditures are expected to boost demand for new aircrafts. Investment opportunities of US$110 billion are anticipated with US$80 billion in new aircraft and US$30 billion in the development of airport infrastructure by 2020, according to the Investment Commission of India. A significant step towards developing India’s domestic defence capability was taken with the introduction of offset provisions in Defence Procurement Procedure (DPP) 2005. Such offset provisions are essentially mechanisms for ploughing back a minimum of 30 percent of the contract value into India, to allow the domestic defence companies to participate in production on order values exceeding ` 300 crores that have been placed on the vendors by the Indian Government. In the context of the processes of social and economic globalization, following characteristics of SMEs need to be kept in mind.

• There are certain distinctive characteristics of SMEs (flexibility, great diversity, low cost inputs etc.) which make them highly competitive as producing units.

• The present global trends (knowledge, innovation, downsizing, networking, and globalization) have reduced the gap that once separated large enterprises and SMEs.

Confederation of Indian Industry, in partnership with the Ministry of MSME, Government of India, is organizing the Global SME Business Summit 2014 on 08 – 09 October 2014 at India Habitat Centre, Lodi Road, New Delhi. A sectoral session on Defence and Aerospace will be conducted on 08 October 2014 between 1500 and 1730 hours as part of the Global SME Business Summit.

The theme of the Global SME Business Summit 2014 is enabling global economic growth through SME partnerships. The objective of the summit is to provide a platform for global SMEs to connect for prospects of
mutual benefits and explore emerging markets. The Summit will also provide enormous opportunities for key decision makers, business leaders, entrepreneurs, local and global funding agencies and other stakeholders to address issues common to SMEs and identify cross border partnership opportunities for policy and procedures, joint ventures, technology transfer and contract manufacturing tie-ups, international business alliance and investment, etc.