Defence and space research sectors have been government funded and closed organisations, until recently. When they were opened up, the two industries saw massive reforms with new and young players entering and creating a vibrant ecosystem, pushing innovation and development much ahead.
DEFENCE DEVELOPMENT WAS limited to public sector for long. It was in an aim to indigenise India’s equirement that organisations like DRDO were formed. With limited funding and slow churning pace, the organisations weren’t able to achieve. Much of their research were limited to laboratories and didn’t see light of the day. India’s defence needs were met through extensive imports. All this took an absolute u-turn just about 10 years back. Today India exports to 85 countries and the value has reached an all time high of Rs 15,920 crore in 2022-23. This marks a Rs 3000 crore increase from last year and about ten times over the value of 2016-17. So how did this happen?
Creating a dynamic ecosystem
Policy changes, Atmanirbhar Bharat and Make in India triggered the change. For a country to be self-reliant, competition among players is an important aspect to keep the field dynamic. Due to to the criticality of operations, defence manufacturing was missing the vibrancy of startups. To address this, Innovations for Defence Excellence (iDEX) was launched in April 2018. It was aimed to foster innovation and technology development in defence and aerospace by engaging industries including MSMEs, start-ups, individual innovators, R&D institutes and academia. Under iDEX, 233 problems were opened, 310 start-ups were engaged and 140 contracts were signed. Further, the defence sector was opened to 74 per cent FDI which helped to address the capital needs. The government also brought in priority to procurement of capital items of Buy Indian (IDDM) category from domestic sources. It provided an opportunity for MSMEs to orient themselves as suppliers to the defence sector. Since this, the share of domestic procurement in the total procurement has been on an uptrend. In 2018-19, the domestic procurement stood at 54 per cent of the total procurement. In 2022, it rose to 68 per cent. In 2022-23 union budget, 25 per cent of defence R&D budget was earmarked for private industry and start-ups to spur innovation in the sector.
Focus on cyber security and defence maintenance
Two defence industrial corridors, one each in Uttar Pradesh and Tamil Nadu have been set up to attract investments. The two State Governments have already signed MoUs with various industries for investment worth total value of about Rs 24,000 crore. The government has targeted defence manufacturing worth Rs 175,000 crore, including defence exports of Rs 35,000 crore by 2024-25. As the sector continues with its indigenisaton spree, it must also look out for technological collaboration and partnerships. This will aid in technology transfer and accelerate cutting-edge research and at the same time expand the market for Indian products. For a country as large as India, if it manages to suffice its domestic consumption and begins to export, the economies of scale will help reduce prices, in turn offering competitive prices in global market. New age threats will arise from drones and electronic warfare. Equipping with high-end and sophisticated cyber security systems will become the key to growth. The sector should also concentrate on after-sales support through maintenance, repair and overhaul services. This will offer better trust and service and increase the chance for repeat orders. All of the above plans`
