The Indian government has received pleas from Indigenous defence industry players for support amidst the COVID-19 situation to not let the country fail in its targets for industrial self-reliance in defence, senior officers in Defence Ministry said.
A large number of such players are apprehensive that they may not survive the corona crisis unless some urgent steps are taken to boost the indigenous defence industry.
As senior officer in Defence Ministry said the local industry players have urged suspension of imports of defence equipment from foreign vendors and re-appropriation of funds planned for foreign acquisition to the Indian industry.
They have also requested that “all government disbursements such as IT and GST refunds and state level incentives need to be disbursed urgently”. Indian MSMEs in defence sector have also sought 100 per cent advances against bank guarantee.
“An indigenous defence industry is a vital objective for India given its security environment and strategic needs,” said a senior IAS officer, adding that the present government in the last few years has taken a number of positive steps to develop indigenous manufacturing capabilities and ecosystem for ensuring self-reliance in the defence sector. As a result, the Indian industry has just started to evolve.”
Lockdown could lead to major adverse repercussions for private companies and their partners,” the officer said. There is a huge implication of lockdown on the indigenous defence industry, the officer said, including paying salary to all employees, even though there is no production and sale.He said working capital challenges are severe for MSMEs as they have no huge surplus cash to pay salaries and for maintaining inventories.
“There may not be any business during the early stages post lifting of lockdown resulting in discontinuity in the business cycle,” the officer explained. He said the government has taken immediate actions to mitigate the effects of COVID-19 on defence industry. However, additional measures need to be taken to save the industry from falling apart.
The government has permitted defence industries to manufacture and function during the lockdown period and has also extended timelines for submission of Request for Proposal (RFP) and Expression of Interest (EoI) till June 1, 2020 in case of all capital acquisition projects. The officer said the timeline for submitting comments and recommendations on draft Defence Procurement Procedure 2020 has also been extended.
“All Defence PSUs have been instructed to expedite payments to MSMEs. The Ordnance Factory Board, BEL, BEML, MDL have ensured that payment dues are immediately processed. Similarly, on the revenue side, payments to MSMEs are also being prioritized,” the officer said. He also explained that Ministry of Finance has given orders that disruption of supply chain due to COVID would be considered as ”force majeure” and provisions of such a clause may be invoked wherever necessary.