In a remarkable journey towards self-reliance and innovation, India’s defence industry is undergoing a transformative phase, with a focus on empowering the youth, startups, and fostering a culture of innovation. The Defence Research and Development Organisation (DRDO) initiated a challenge in August 2018, presenting ten problems to the industry, calling for solutions within three years. Astonishingly, Indian startups showcased their agility and ingenuity by providing solutions within a mere 12 months, highlighting the untapped potential within the nation.
At the forefront of evolution of Atmanirbhar in the Defence Manufacturing are the Micro, Small, and Medium Enterprises (MSMEs) in India’s aerospace and defence sector. With nearly 10,000 MSMEs actively contributing, these enterprises play a pivotal role in shaping the nation’s defence landscape. The government’s support is crucial in propelling these MSMEs towards self-reliance and fostering a collaborative environment.
Dr Ajay Kumar, the Former Defence Secretary said, “the key to this transformation lies in expanding the ecosystem of innovation within the defence industry, moving beyond the traditional players like DRDO and embracing newer ideas from a multitude of sources. India boasts a pool of talented scientists eager to contribute to the nation’s defence capabilities. By providing them with opportunities and focusing on building a robust ecosystem, India is positioning itself to emerge as a global leader in defence.”
The Make in India initiative, a flagship program of the Government of India, aims to integrate MSMEs into the defence supply chain, enhancing the nation’s self-reliance in defence and facilitating entry into the global defence exports market. Recognizing the significance of MSMEs as employment generators, innovators, and contributors to GDP, the government is keen on leveraging their potential.
As of now, there are approximately 13 million SMEs in India, representing 80% of the country’s business. Over the last decade, this number has doubled, showing the growing role of MSMEs in the nation’s economic landscape. These enterprises are already significant contributors to defence manufacturing, producing a myriad of quality products at the sub-system and component levels.
Despite their potential, MSMEs in India face challenges such as limited integration, outdated labour laws, and comparatively low value addition. However, the government is actively addressing these issues. The Defence Ministry’s Technology Development Fund (TDF) scheme, launched in 2016 under the Make in India program, has supported 41 MSMEs and 20 startups. With an allocation of Rs 260 crore, the TDF scheme encourages MSMEs and startups to design and develop indigenous defence technologies.
The TDF scheme operates on two funding mechanisms, providing the DRDO share of project costs in instalments upon achieving milestones and offering advance funding for projects. This financial support shows the government’s commitment to fostering innovation and self-reliance within the MSME sector. Furthermore, the indigenisation process has gained momentum through initiatives like the Srijan portal, where over 30,000 defence items by Defence Public Sector Units (DPSUs) and services are made available to MSMEs. This collaborative approach aims to bring MSMEs into the mainstream of defence production and strengthen their role in building a self-reliant nation.
In a significant move, the Small Industries Development Bank of India (SIDBI), a principal financial institution for MSMEs, signed a memorandum of understanding (MoU) with the Society of Indian Aerospace Technologies and Industries. This collaboration is designed to facilitate mutual cooperation, offering support and financial assistance to MSMEs in aerospace, defence, and other sectors.
An example of progress is Maharashtra, the first state in the country to introduce a dedicated policy for the defence and aerospace industry in 2018. Allocating Rs 1000 crore to support the industry, Maharashtra has witnessed the establishment of 600 SMEs within five years, thanks to state government funds. At Defence Expo, Deputy Chief Minister, Devendra Fadnavis said, “with 11 ordnance factories, 5 defence PSUs, a DRDO facility, and the National Defence Academy, Maharashtra has become a hub for technological advancements, creating an ideal environment for collaboration between PSUs and MSMEs.”
The recently concluded MSME Defence Expo highlighted Maharashtra’s commitment and showcased the collective determination of MSMEs in defending the nation. The state’s investment and policy support have laid the foundation for a thriving ecosystem that fosters innovation, collaboration, and self-reliance.
India’s defence industry is witnessing a paradigm shift, with MSMEs emerging as the driving force behind the nation’s quest for self-reliance. The government’s initiatives, such as the Make in India program, the TDF scheme, and collaborations with financial institutions, are instrumental in empowering MSMEs. As these enterprises continue to innovate and collaborate, there is no looking back – MSMEs are not only ready but are actively defending the nation’s interests on the global stage.
