Beat the Stereotype, MSMEs Must Explore Defence Sector as the Potential Buyer

By Faiz Askari, Founder Editor of SMEStreet

With over 50 million MSMEs across India, around half of them are somewhere related to manufacturing. A major chunk of this figure is focused on exports, trading, retail, contract manufacturing and so on.

There are major buyers such as Railways, IRCTC, manufacturing PSUs etc. Among these names, the defence is a major name among buyers. Hardly around 5000 MSMEs, out of 50 million, are catering to the needs of the defence sector.

From a home furnishing to FMCG items to simple cookie manufacturers to garment manufacturers, in fact, almost every product category has an appeal to the sales network for Indian defence sector.

However, there is a set process required to get listed in the defence procurement set up. Sometimes the awareness of such knowledge is not easily available and sometimes MSMEs doesn’t even understand the need to diversify their market.

The role of ex-servicemen or the retired armymen can also be very useful for MSMEs who wish to target defence sector for selling their respective products.

While developing this subject as an advisory article for MSMEs, SMEStreet interacted with experts and ex-armymen who understands the defence sector and also understand the process involved in selling to defence, it was a unanimous conclusion that the ex-servicemen can help the common MSMEs to act as a bridge between the two parties. The government can play a significant role in this direction.

Its also just a limited approach to consider defence as a buyer of arms and related products. But, this fact cannot be ruled out that core defence products can be procured by the MSMEs. So the scope of manufacturing MSMEs in the overall defence sector is huge.

However, experts also believe that public sector undertakings and private partners should come together and collaborate to meet the security challenges of the country in the future, said V.M. Chamola, Director (Human Resources) of Hindustan Aeronautics Limited while speaking to an MSME audience in an event.

He made the above remarks at the conference on the theme “Small is Big”, organized by Texas Ventures as a part of the SUBCON expo.

However, one key parameter, for every MSME who wish to serve the Indian defence sector, is to ensure the best quality in its products. Moreover, once the MSME gets listed or once they start selling to the defence sector the window of opportunities become wider and even more lucrative.

MSMEs often consider that preparing their product as per the standards required by the defence sector can be very capital intensive, well this is yet another wrong perception. All this and much more need to get clarified by the entrepreneurs before even taking this route to sell to defence.

Going by this wrong perception that in order to sell to defence and manufacturing organization need to adopt a capital-intensive preparation for the sector and there is a large scale requirement of research, technology and skills prevents MSMEs participation in this sector. Well, all this could be true in some very select cases. But the majority of MSMEs can also consider defence as an opportunity to sell simple products such as clothing, home furnishing, food items for breakfast or simple household items.

So, at this moment beating the stereotype is a must for every entrepreneur who is in the business o selling. The defence can be a lucrative sector for any MSME who can ensure compliance and standards. Well, these standards and compliance are not something which cannot be met, but this compliance can be considered as a commitment to serving the customer with the best.