The Government has taken the following policy initiatives for promotion of Micro, Small & Medium enterprises (MSMEs) in defence sector:

In the Defence Acquisition Procedure 2020, there are specific reservations on Orders up to Rs 100 crore/year for MSMEs.

An innovation ecosystem for Defence titled Innovations for Defence Excellence (iDEX) has been launched in April 2018. iDEX is aimed at creation of an ecosystem to foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, Start-ups, Individual Innovators, R&D institutes and Academia and provide them grants/funding and support to carry out R&D which has potential for future adoption for Indian defence and aerospace needs.

The Defence Offset guidelines have further paved the way for proactive participation of MSMEs of India by incorporating a scheme of multipliers of 1.5 for engaging MSME as Indian Offset Partners (IOP), which promotes their integration in global supply chain.

MSMEs are important partners in DRDO projects and DRDO transfers technologies to them. They are important partners in industry ecosystem for the production of DRDO developed products. DRDO through its scheme Technology Development Scheme (TDF) funds industries, especially Start-ups and MSMEs up to an amount of Rs 10 crore, for innovation, research and development of Defence Technologies in the field of Defence and Aerospace.

Public Procurement Policy for MSEs Order 2012, notified by Ministry of Micro, Small & Medium Enterprises has also been adopted by all Defence PSUs.

Financial year

(In Rs crore)









2022-23 (Till 26.07.2022)


Department of Defence Production (DDP) conducts outreach programs in various parts of the country to interact with Industry Associations, Industry, especially MSMEs and academia, to spread awareness about the potential export opportunities. A scheme aimed to promote MSMEs in defence is in place. Under this scheme, conclaves/seminars are being organized in Tier-II and Tier-III cities across the country having strong industrial MSMEs presence with the support of the DDP.

Regular interactions are taking place to settle the grievance of vendors at DPSUs. Defence Investor Cell has been opened in DDP to address the issues being faced by vendors especially MSME vendors.

Further, 137 contracts have been signed for capital procurement of defence equipment with Indian vendors including MSMEs. No separate data for MSMEs is centrally maintained in this regard.

Details of the annual procurement of general goods and services from MSEs including SC/ST and Women by the Ministry of Defence are given as under: