Chennai witnessed one of the biggest international shows that Indians layout biennially: DefExpo 2018. As I visited hall after hall, I also realised, that this was perhaps the biggest congregation of MSMEs in the defence sector that I have ever seen before.
It would be prudent to analyse the backdrop that catalysed the MSMEs into stepping out in such large numbers before we talk about the show they put up at the DefExpo. The foremost factor that triggered the interest of the business community into entering the defence production area was the emphasis laid on indigenization of defence production in the DPP 2016. Along with indegenisation, the DPP 2016 also came out with the Indian Designed, Developed & Manufactured category. It also retailored Make procedures. The recent liberalisation of the Make 2 procedure, has provided further incentive to MSMEs.
The other reason is the sheer size of the defence budget. At Rs 2.95 lakh crore, it’s the fifth largest, globally. The outlay for both the Capital and Revenue heads have implications for the defence manufacturing and services sectors. The budget when analysed reveals that for every hundred Rupees that the Indian government spends, Rs 9/- is for the defence sector. Obviously, a great business opportunity is there to earn a decent profit.
At the curtain raiser conference preceding the DefExpo, the Secretary – Defence Production had informed that 20% of the display area had been outlined for MSMEs. Going by the fact that most MSMEs rented only the minimum required space to display their products, their numbers were definitely substantial. Over 500 Indian companies had put up their stalls at DefExpo 2018. Most of these were MSMEs. Though the overall number of companies participating in the DefExpo 2018 was lesser than its previous edition in 2016 at Goa, the slide was limited to the foreign companies segment.
One area where the MSMEs benefitted greatly was in terms of exports. A total of 47 foreign delegations visited the expo. In addition, large number of defence attaches of various countries also visited the premises and went around of the stalls.
For the first time, all Indian defence attaches with our missions abroad had been marshaled for the DefExpo. They too visited the MSMEs. Our Defence Attaches have obviously been tasked to identify export opportunities in the countries they are accredited to. Should the DefExpo be followed by an institutionalised mechanism through which our defence attaches can communicate possible opportunities for export to the MSMEs, it could serve as a valuable information channel to enhance exports.
A few MSMEs also signed joint ventures. Prominent among these was Cyient which signed up for a joint venture with Blue Bird for unmanned aerial vehicles (UAV). UAVs have caught the imagination of a substantial number of business establishments. Various smaller models of the UAVs were on display in the halls. Some of these were models that have undergone some testing, while others were at the design stage. Collaborative Intelligence had a micro UAV model on display which can fly through a window and provide live coverage with an optical payload.
Specialised clothing for desert and high altitude areas is one where the MSME density is very high. At the Shiva Texyarn premises, the products included NBC suits, rucksacks and field mattresses. Protective gear to include helmets and bulletproof jackets were on display in the stalls of multiple companies.
At a technologically more sophisticated level, Aeron Systems had inertial navigation systems of various sizes on display. These are already in use on certain equipment. The navigation systems can be utilised onboard UAVs also. Cornet technology had a wide range of electronic equipment for C4ISR (Command, Control, Communications, Computers Intelligence, Surveillance and Reconnaissance) tasks. The equipment included TVCS Gateway, Single Board Computing and Single Unit Terra Video.
It’s the nurturing of the MSME sector that will create the right eco-system for indigenization of defence production. Of course, the requirements are not limited to business opportunities but skilling and cost of capital. The sector will need a lot of handholding by the government and larger Indian defence sector companies.
Larger Indian companies must be incentivised to outsource manufacture of components and sub-systems to MSMEs. In fact, major contracts must stipulate the percentage of the contract value that must be outsourced to MSMEs.
In terms of job creation, an objective that is every government’s endeavor, it’s the MSME sector where most jobs are created.
DefExpo definitely provided the MSMEs a vibrant platform to promote their products and also forge relationships with the bigger players in the industry for possible induction in their supply chain. Most MSMEs would also need to export for a viable business model. At DefExpo, they were able to reach out to foreign buyers at a low cost.
The services, DRDO, DPSUs, OFB had all put up their stalls with adequate staff available to guide MSME representatives. The India Pavilion at DefExpo, the first one of its type, showcased Indian achievements both in the Government and the private sectors.
For the MSMEs to progress, there is a requirement of inducting the latest technology. It’s also when we actually achieve IDDM specifications that indigenisation can be said to have been truly achieved. Hence, design and development are all important in our roadmap to indigenising our inventory. To achieve such a status our academic institutions and research and development agencies need to take the lead. A seminar was conducted by IIT Madras and BharatShakti.in during the event. Seven professors of IIT Madras spoke on several technologies being developed by IIT Madras for the services. In the audience were both academicians as also industry professionals.
Brig SK Chatterji (Retired)