India’s micro, small and medium enterprises (MSMEs) sector has come of age and can play a critical role in making the country truly Atmanirbhar (self-reliant) in defence equipment manufacturing as envisioned by Prime Minister Narendra Modi, with support from the central government.
The ‘Make in India’ initiative of the Modi government has already helped in bolstering domestic manufacturing capabilities and at the same time reducing the country’s dependence on imported defence equipment. It has also led to multiple collaborations between domestic players and foreign defence manufacturers, resulting in the transfer of technology and expertise.
India’s MSMEs encompass a wide array of industries, ranging from manufacturing to technology and innovation, and are in a position to provide specialised and niche solutions that are often required in the defence sector. They produce a range of defence equipment, from fighter jets to submarines, domestically, leading to increased innovation, job creation, and cost-effective solutions.
In order to encourage startups and MSMEs to invest in the defence manufacturing sector, Rs 1,500 crore has been earmarked in FY 2023-24 for them from the budget earmarked for procurement through domestic private industries (DPI), which is to the tune of Rs 24,805.76 crore.
Many MSMEs and start-ups are involved in design and development of defence products under various schemes such as Innovation for Defence Excellence (iDEX), Technical Development Fund (TDF), and Make Project of Defence Acquisition Procedure (DAP) 2020.
India’s defence MSMEs are at the core of the central government’s resolve to achieve a $26-billion defence industry with an anticipated investment of $10 billion in aerospace and defence goods and services by 2025.
This will also provide employment to about 2-3 million people. Simplification of procedures for defence exports resulted in the export of Rs 10,745 crore in 2018-19, which is nearly seven times the export achieved in 2016-17 and a target of US $ 5 billion for exports has been set till 2024.
Currently, over 8,000 MSMEs are engaged in defence production and efforts are on to double this figure to 16,000, which will further bolster India’s export potential, positioning the country as a global player in defence manufacturing.
Support to MSMEs not only ensures a substantial portion of defence manufacturing happens within the country but also adapts quickly to changing requirements and offers cost-efficient alternatives, which is particularly important in defence, where cost overruns are a concern.
Thanks to the resilience of MSMEs, the Indian defence industry is now manufacturing a wide variety of high-end requirements like tanks, armoured vehicles, fighter aircraft, helicopters, warships, submarines, missiles, electronic equipment, special alloys, special purpose steels, and a variety of ammunition.
MSMEs have adopted innovation and research, leading to the infusion of cutting-edge technology and expertise into the defence sector. As a result, India has witnessed rapid progress towards achieving the goal of completing Aatmanirbharta in the manufacturing of defence equipment required by our armed forces within the country.
Many state-of-the-art products including 155 mm artillery gun system Dhanush, light combat aircraft Tejas, surface-to-air missile system Akash, main battle tank ‘Arjun’, T-90 tank and T-72 tank, and armoured personnel carrier ‘BMP-II/IIK’ are being produced in the country.
Even Su-30 MK1, Cheetah helicopter, advanced light helicopter, Dornier Do-228, high mobility trucks, INS Kalvari, INS Khanderi, INS Chennai, Anti-Submarine Warfare Corvette (ASWC), Arjun Armoured Repair and Recovery Vehicle, Bridge Laying Tank, Bi-Modular Charge System (BMCS) for 155 mm Ammunition, Medium Bullet Proof Vehicle (MBPV), Weapon Locating Radar (WLR), Integrated Air Command and Control System (IACCS), Software Defined Radios (SDR), Lakshya Parachute for Pilotless Target Aircraft and Water Jet Fast Attack Craft have also been produced in the country during the last few years.
Last but not least, relying on a diverse set of MSMEs for defence manufacturing provides redundancy and resilience in the supply chain. It reduces the risk associated with a single-source dependency on larger corporations, ensuring a consistent supply of critical components.
As MSMEs possess local knowledge and understanding of specific regional or logistical challenges, this can be invaluable in designing and supplying equipment tailored to India’s unique requirements. They are vital contributors to the Indian defence sector, not only for their ability to provide cost-effective and specialized solutions but also for their role in promoting self-reliance, innovation, and employment generation.
What is needed at the moment is a little push by the government in terms of fiscal and non-fiscal incentives to enable the country’s MSME sector to play a bigger and more vital role in contributing to the nation’s defence requirements, especially with regard to high-tech equipment. It is essential not only to make India Atmanirbhar in defence production but also to reduce dependence on imports of critical equipment.
(The author is MD and CEO of Samtel Avionics Limited and chairman of CII Delhi State Council)
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