The government will encourage small scale industries in the country's defence sector for supplying components and sub-contracting work, Defence Minister Pranab Mukherjee said on Saturday.
"The government has decided to formulate a scheme to encourage micro, small and medium enterprises in the defence sector," he said after giving away the national awards for SSI and rural and agro industries.
Mukherjee said the government would also extend marketing support to SSI units, which can supply several useful products such as geotextiles to defence forces.
The defence sector was opened up for private participation in May 2001 and since then the role of private companies has expanded rapidly, he said.
The government is also working on a promotional package for the small scale sector, he said, adding the package would be announced shortly.
Government officials said the proposed package would focus on development of clusters and improve their efficiency. The package is likely to cost the government around Rs 2,300 crore and would be spread over five years.
Mukherjee said to provide legislative support to SSI units, the Micro, Small and Medium Enterprises Development Act has become operational from this month.