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MSME in Partnerships

Sector Overview

The MSME sector is an important pillar of Indian economy as it contributes greatly to growth of Indian economy with a vast network of around 30 million units, creating employment of about 70 million, manufacturing more than 6000 products, contributing about 45% to manufacturing output and about 40% of exports, directly and indirectly. This sector even assumes greater importance now as the country moves towards a faster and inclusive growth agenda. Moreover, it is the MSME sector which can help realize the target of proposed National Manufacturing Policy of raising the share of manufacturing sector in GDP from 16% at present to 25% by the end of 2022.

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Strategic Partnerships : Challenges and Opportunities for Indian Corporates



Indian Military is today at the cusp of scanty preparedness, dealing with old and obsolete equipment and systems on the inventory, that they can neither use nor discard, with little hope of any replacements or upgrades in the near future. Indian defence procurement process is plagued with such incompetence that none in the corridors of power is either accountable or blamed for incompetency or non-performance, in ensuring compliance to the timelines laid down. They are in such a critical state of non-performance that they are not able to adhere to the time-lines laid down by themselves.

Observations from CAG clearly highlight the chinks in India’s armour. India’s defence forces have faced a shortage of personnel and critical equipment because acquisition and modernisation plans remain stuck in a mesh of bureaucracy. Out-dated equipment, technologically backward, low reliability, and perennially in short supply – these are just some of the problems with India’s defence equipment. Delayed modernisation has ensured that defence capabilities are way behind countries such as China. India now spends 1.1% of its GDP on defence (capital expenditure ex-land and construction), which is higher than the US (0.8%) and largely in line with that of UK (1.4%). While India’s capital defence spending has increased (vs. US and UK), only a small part of it goes towards new equipment. In addition, almost 60% of the annual capital budget is towards imports, mainly because India’s defence PSUs lack the expertise to manufacture complex systems and private sector participation is still nascent. In order to correct this anomaly, the current government has taken steps towards changes to procurement procedures – by introducing new category IDDM, revision of the defence products list, issuing industrial licenses to the private sector, and relaxing FDI norms. India’s Defence Minister, Shri Manohar Parrikar, has been leading from the front to address the sluggishness in defence preparedness, head on.

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