Government cancelled defense order worth Rs 6,000 crore to promote foreign investment alleges Defense & Aerospace MSME federation

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New Delhi: Jolted with the recent order of Defence Ministry not to supply the order of around 6,000 crore, Federation of MSME vendors of Defence and Aerospace told on Wednesday that it seems like that union government wants to promote foreign investment in defense sector.

The federation is also connecting this order with the Union Government’s recent decision, where 6,000 crore defence budget has been trimmed down.

Four days ago, Ministry of Defence (Department of Defence Production) has issued letters to the Micro Small and Medium Enterprises (MSME) who are manufacturer / supplier of ordnance factories, asking them to stop supply against already issued supply orders until further notice.

The Federation of MSME Vendors of Defence and Aerospace which represent MSME (Micro Small and Medium Enterprises) said that this move shall bring these units at the brink of closure and shell further result into unemployment of approximately 300,000 at these 180,000 are associated with various ordnance factories and almost similar number with employment being provided by MSME companies. This will cause wide scale of bank defaults amounting in crores of rupees.

Secretary of the federation, Neerja Mehra said, “This move will break the back bone of Indian MSMEs as well as there will be huge shortage of arms to the armed forces. Besides, approximately 300,000 at these 180,000 are associated with various ordnance factories and almost similar number with employment being provided by MSME companies.”

“It seems that the government wants to promote foreign investment in defence sector,” he added.
They further said that the move is against Indian Contract Act 1872, where companies can’t cancel the order on the last moment. Moreover, this will also cause non compliances of labor laws.

While the chairman of the federation Sunil Kumar Patodia said, “There is no visibility in the near future as to when the material can be supplied to Ordnance Factories. There are cases where the orders are towards product development in such cases vendors have invested hard work of trial and error of many weeks and months, invested in Bank interest, wages. All this investment was done with a hope that the same shall be recovered from future supplies. Their investment as well as hopes has dashed on to the ground.”

He further added that the step is taken in a very coldly lap sided and harsh manner without giving any opportunity to vendors to explain their problems and suitable redressal there of in the month of April ordnance factories were expediting dispatches by taking stock of production schedules and to rev up them. Just one month after the above mentioned letter is given to stop supplies. There are vendors who are supplying only to the ordnance factories for decades and do not have any other occupation to earn rice bowl for their families

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