With an aim to channelise investments and help the small and medium industries, Ministry of Defence will soon set up a dedicated defence and aerospace SME fund, registered with SEBI where minority stake could be taken by investors.
“This fund would help channelise investments into the two defence corridors announced by the governments of Tamil Nadu and Uttar Pradesh,” said Dr Ajay Kumar, Secretary, Department of Defence Production, MoD, while speaking at the FICCI session on Offsets: Way forward towards a win-win framework. The session was held at the DefExpo 2018 organised by the MoD to discuss and deliberate on the business opportunities in the defence production sector.
Sharing the government’s thought process on major reforms in the offset policy, Kumar said that the OEMs and the government were both dissatisfied with the earlier policy and that the MoD wishes to indulge in a larger dialogue with all stakeholders.
He highlighted saying that the new paradigm would focus on three principles—investment in defence infrastructure like government identified PSU/ quasi-PSU projects, providing higher incentives for transfer of ‘Know Why’ and targeted offset discharge. He added: “Investments into testing infrastructure, training facilities and test beds would attract higher value of multiplier.”
The government has addressed the current concerns of OEMs of delays in offset discharge by putting in place a framework for ensuring ease of doing business. In addition, measures such as facilitating third party certification based on data provided by the Registrar of Companies (ROC) subject to physical verification and statutory audits have also been taken.