With 12,000 MSMEs in the ecosystem, how India’s defense sector can become self-sufficient

Small businesses or micro, small and medium-sized enterprises (MSMEs) have a big role to play in the defense sector, senior officials stressed at an event organized by the Chamber of Commerce and Industry PHD on 30 and March 31, 2022.

At the second edition of the International Conference on Defense and Security, several stakeholders from the MSME and defense ecosystems came together to discuss the contribution of small businesses to the defense sector.

Pradeep Multani, President of PHDCCI, pointed out that “the work of small companies often hides behind the big ones.

Bhanu Pratap Singh Verma, Minister of State for MSMEs, said the government is paying special attention to integrating MSMEs into the defense supply chain, thus helping the country to become self-sufficient.

Last December, Defense Minister Rajnath Singh announced that around 12,000 MSMEs have joined the defense industry and the country’s exports crossed the Rs 38,000 crore mark over the past seven years. He had said that MSMEs would play a greater role in meeting national and international requirements.

Removal of roadblocks

India is heading towards a future where it may not have to import anything, said Sanjay Jaju, Additional Secretary, Defense Production. The government official further added that India may achieve the highest export turnover of defense products this year.

Speaking at the conference, Jaju said India must believe in its ability to produce world-class defense goods. “Faith is not there in our systems,” he joked.

He further added that India is experiencing a “liberalization of defense production” in which more private sectors will also be integrated into the ecosystem. “I have friends from global OEMs (Original Equipment Manufacturers) like Lockheed Martin sitting right here. This is not a comment on foreign OEMs, as we are now independent of ownership,” a- he declared.

Jaju gave the example of COVID-19 vaccines which were manufactured in India to highlight India’s role and potential in producing and exporting goods.

The bureaucrat also pointed to a major challenge within the defense ecosystem that is preventing India from becoming self-sufficient in the defense sector – the time required for approvals. “Sometimes the time it takes to design and develop is less than the time it takes to get approvals,” he added.

He said that to overcome this and other challenges, the government has taken several measures, such as suspending or removing some of the watchpoints that act as obstacles to the marketing of defense products. “We will remove barriers, but it also depends on industry players,” he said.

Official Twitter of Bhanu Pratap Singh Verma

Become independent

Mayank DwivediDirectorate of Industry Interface and Technology Management, Defense Research and Development Organization (DRDO) stated that local businesses and startups can design complete systems for the military research and development agency.

He said it would help build strong, local supply chains and improve the overall ecosystem. He further pointed out that the “return on investment may not be immediate”, but the practice of local manufacturing will be rewarding in the long run.

Hari Mohanformer chairman and chief executive of the Ordnance Factory Board of the Ministry of Defence, said manufacturing in India reduced production costs.

He suggested that MSMEs should focus on manufacturing quality-driven products, as defense products are “highly optimally designed” and must meet all certification requirements and standards.

Guillaume BlaireVice President and Managing Director of Lockheed Martin India Pvt Ltd said MSMEs are at the “heart of aerospace and defense production.” The challenge for big business is to integrate small business into global supply chains.

MK GuptaChairman of PHDCCI Defense and the HLS Committee, added that in addition to encouraging innovation in the sector, collaboration (in the form of joint ventures, signing of MoUs) between global original equipment manufacturers and Indian MSMEs should be the focus.

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