From Innovation to Induction: Why MSMEs, Start-Ups Need Direct Access to Military

Editor’s Note:

The author argues in this piece that while initiatives such as iDEX and defence expos have widened the innovation base, the real test lies in directly linking MSMEs and start-ups with the operational requirements of the armed forces. He calls for a more hands-on role by the Services in mentoring and integrating young defence entrepreneurs, and for a practical, inclusive implementation of the Negative Import and Positive Indigenous Lists under the new acquisition framework to translate intent into deployable capability.

India’s contribution to World GDP declined from a steady 25-30% a century and a half ago to less than 2% during British rule. India’s share in global growth has again picked up and now stands at over 7%. India is the fourth-largest economy in the World, after the US, China, the UK and the EU together.

India has displayed its capabilities in reaching the Moon and has the most innovative “Mars” mission. Also, one of the few countries to have designed and produced four-plus-generation fighter aircraft, a nuclear submarine, a successful SAM system, an MBT, an ICBM, and an indigenised Ballistic Missile Defence System.  Yet, India is producing and delivering less than 50% of its Military Capability requirement, and that too at the low end of technology. With a national thrust towards innovation and self-reliance, India is now relying on home-made weaponry and has even started exporting them.

Today, the national leadership is ready to take bold and long-lasting economic decisions to make India a self-reliant nation.  Thus, the decisions of “Make in India” in 2014 and “Atmanirbhar Bharat Abhiyan” announced on May 13, 2020, are correctly focused and achievable.

Prime Minister Narendra Modi said that the country should view the COVID-19 crisis as an opportunity to achieve economic self-reliance. In his address to the nation, he stressed the importance of promoting ‘local’ products and named the mission – ‘Atmanirbhar Bharat Abhiyan’ (or Self-reliant India Mission).

A great giant vision of a self-reliant India, which is beaming with pride and capable of giving the world a direction, reiterates loud and clear that the 21st century is India’s, and that it is not just a dream.

The cherished goal of the ‘Mission Atmanirbhar Bharat’ is based on five pillars that move steadily from local to global.

The Self-Reliant India Mission aims to reduce import dependence by focusing on substitution, while improving safety compliance and quality to gain global market share. The Mission also complements the ‘Make in India Initiative’ by encouraging manufacturing in India and by promoting ‘local’ products, based on five pillars: Economy, Infrastructure, System, Vibrant Demography, and Demand.

Military Capability Building Process

As per the Constitution of India, the Ministry of Defence is responsible for National Security and for providing Military Capability to counter perceived National Threats. To achieve this objective, all four Operational Departments of the Ministry, namely, ‘Department of Military Affairs’, ‘Department of Defence’, ‘Department of Defence Production’, and ‘Department of Defence R & D’ work in unison and like any other military carry out:

• Military Threat Analysis.
• Draw a National Military Security Strategy.
• Strategise the required Military Capability.
• Identify the Capability Voids.
• Prepare a long-term and an immediate weapons-induction priority plan.
• Procure the best weapon systems to counter the perceived threats.
• Finally, build inductive capability before the threat is perceived.

To achieve the above desired military state of the nation, the departments of the MoD steer the procurement cycle to acquire the best weapon system by optimally utilising the allocated budgets as per the financial guidelines of the Government of India.  It is, thereafter, the collective responsibility of all departments of the MoD to build the National Military Capability by timely inducting the right weapon systems to counter the threats envisaged by the nation.

The Acquisition Entities

There are three entities responsible for equipping a soldier. These are the defence industry, the military and the acquisition managers. Following the recommendations of the Kargil Review Committee and the Parliamentary Committee headed by LK Advani in 2002, an Integrated Military Headquarters (HQ IDS) and an Acquisition Wing under the Department of Defence (DoD) were created to form an ecosystem to ‘Arm the Armed Forces’.

The Acquisition Wing promulgated its first Defence Procurement Procedure, DPP-2002. However, within two years, DPP-2002 changed to DPP-2004, then to DPP-2006, then to DPP-2008, then to DPP-2011, and then to DPP-2013. A new DPP emerged almost every second year, perhaps because it failed to meet the felt need of both the industry and the military.

Manohar Parikar, the then Defence Minister, took it upon himself and issued a new version, DPP-16, which brought about greater transparency, with a focus on the National Vision of ‘Make in India’.  However, within 47 months, even though DPP underwent 47 amendments, forcing the MoD to produce a new, more inclusive version of the Procurement/Acquisition Procedure.

On 20th March 2020, the Acquisition Wing released an amended version of DPP-16 as Draft DPP-2020; however, both the defence industry and the Indian Military submitted thousands of pages of suggestions, which were more creative and aligned with ease of doing business.  All the observations were deliberated upon, and finally, in September 2020, the Defence Minister Rajnath Singh promulgated the Defence Acquisition Procedure (DAP-2020).

National leadership is concerned because, despite a DAP that is presumably in sync with ‘Make in India’ and has lasted the longest, our military hardware import dependency is not reducing.  Measures like ‘Positive indigenous List’ are also being resorted to; the aspirations of the military and the industry are growing at a much faster pace than envisaged in 2020.  MoD therefore initiated a revision of the existing DAP, and on February 10, 2026, a draft DAP-2026 was hosted for the concerned parties’ comments.

Defence Acquisition Procedure

The Defence Acquisition Procedure aims to ensure the timely procurement of military capability as strategised and prioritised by the Armed Forces. The procurement process should optimally utilise the allocated budgetary resources and ensure the highest degree of probity, public accountability, transparency, fair competition, and a level playing field.  In addition, under the ‘Make in India’ initiative, steer the process towards self-reliance in the production of defence equipment and steadfastly pursue the ultimate aim to develop India as a ‘Global Defence Manufacturing Hub’.

The national capability-building process requires a systems approach to realign the entire ecosystem with the national vision and to simplify the acquisition process. To achieve the national vision, we have to recreate a new ecosystem and align it with the changes brought about by DAP-2026.

Recommendations by the Author

Thousands of MSMEs and Start-Ups are being encouraged by the Department of Defence Production through initiatives such as iDEX and Def Expos.  However, the need of the hour is to connect these MSMEs and start-ups directly with the military. A path-breaking solution is required to boost the initiative of this bubbling Indian defence mind and seamlessly integrate with the military to meet their immediate hardware requirements.  Promulgation of ‘Negative Import List and Positive Indigenous Lists’, with an inclusive approach, as also recommended in the new DAP, for handholding the young entrepreneurs, needs to be steered by the Services.

Re-defining Indian

Keeping in line with the National vision of ‘Make in India’, and to cater to the ‘Military Capability Voids’ and as suggested by the new DAP-2026, the source of Capital Acquisition could be broadly classified as just:

‘Indian’ or ‘Not-Indian’.

Indian: For a product to be classified as Indian and fulfil the ‘Make in India’ vision, the vendor and their weapon system should have a Production Line set up in India. The Technology/IPR must be owned by an Indian firm, as also recommended in the new DAP. Further, jobs must be created for Indians, taxes paid to the government, and supply chain management should also be in India. Finally, the product must hit the markets as an ‘Indian Brand’.

Priority of procurement for the ‘Indian’ classification could be:-

• Priority – I:  Designed, Developed and Manufactured in India; or
• Priority – II: Developed and Manufactured in India; or
• Priority – III: Acquired and Manufactured in India; or
• Priority – IV: Partnered with a foreign vendor but manufactured in India.

All the above, under the category ‘India’, will satisfy the national vision of ‘Make in India’ and should be analysed and certified by the Department of Defence Production.  A vendor database categorising all the Indian vendors needs to be captured by the department and hosted on an e-portal. The department should set up guidelines for the industry to ensure the capabilities specified above and screen them to qualify under the ‘Indian’ category before being added to the e-portal.

Not-Indian. An equipment which doesn’t fulfil the national vision of ‘Make in India’ should be classified as ‘Not-Indian’, whereby neither the technology comes to India, nor the manufacturing line is set up in India, nor does it serve the route to self-reliance and could be:

• A temporary manufacturing line in India to deliver a capability or
• An outright import from a foreign vendor.

‘Defence MSME and Start-Up Portal’ (DMSP)

The time has come to capture data on products launched/under R&D, or still on the drawing boards of an MSME, a start-up, or a technical mind in an academy, and make it visible to the military through a web portal.

DMSP should capture every Defence-related product/equipment being manufactured or conceived by Indian vendors and must be initiated under the authority of the Department of Defence Production.

DDP, after verification, should upload the following details on the portal:-

• The detailed specifications of the product.
• Per unit cost and any other pricing mechanism.
• Production capacity.
• Delivery capability.
• Life Cycle support and upgrade packages.
• Source of technology.
• The company’s registration details under the Indian Companies Act.
• Its balance sheets and funding sources.
• International engagements for technology, IPR, funding & exports, etc., if any.

Capability Building Process

All Delegated Power Cases for procurement should first be initiated through the DMSP route, and the following recommended procedure would maintain the basic sanctity of DAP:-

• Accord the AoN in accordance with the procedure laid down in the current DAP.
• SQRs generated by the User Directorate should be compared with the product specs on the Portal by a ‘Spec QR Comparison Committee’ nominated by the User Directorate, to ensure that the capability offered meets the Operational end-state.
• After the SHQ approves the above report, the trial matrix should be hosted by the respective SHQ and invitations to the vendors should be sent on a specified date for the Field Evaluation Trial. The user directorate should conduct the trial, and the respective PSO should approve the report.
• The vendor who passes the FET and is L1 could be invited for a Cost Negotiation by a CNC constituted by the CFA.
• If a vendor fails the FET, the reasons for his failure must be hosted by the Department of Defence Production on the same page where his data appears on the Portal. The vendor should not be disqualified from future participation, but the reasons for the failure should be known to the next CFA before procurement initiation.  Justification for disqualification should facilitate the vendor’s improvement of their product for future participation. The product improvement should also be displayed on the page, along with the revised Specs.
• After a vendor musters the FET and the CNC is completed, the case on the Portal should be moved to the respective IFA (Capital), who should, within a given time frame, complete their financial vetting in accordance with the MoD (Finance) guidelines.
• Upon completion of the formalities by the IFA on the digital platform, the CFA (Vice Chiefs of the respective Services) can directly place the supply order and make the payment through the Portal itself, as is the case on GeM.
• However, the IFA’s concurrence and vetting should be dispensed with during emergency power periods, and the CFA should place the order straightaway.

A Standard Contract Document, as recommended in the DAP, should be entered into. The contract signing date is the effective date for acquisitions and delivery schedules.

Conclusion

This revolutionary procedure would not only speed up the acquisition process for building military capability through delegated power cases but also give a direct boost to MSMEs and Start-ups. The new DAP recommends a five-year hand-holding through iDEX, but there are still many innovative Indian minds ready to fill capability gaps who don’t qualify for iDEX and thus stay away from doing so.

The normal DAP procedure is not only tedious but also extends the acquisition cycle, which adversely affects small investors and exacerbates capability gaps.

Through the Defence-MSME and Start-up Portal, the development element, which, as of now, is not visible to the Services, would also be able to participate in the gap-bridging process of Capability building, and the Services would be able to fill many capability gaps indigenously.

Air Marshal (Dr) Rajeev Sachdeva (Retd) (Author was DCIDS (PP& FD) at HQ IDS and Chairman of the SCAPCC and Member Secretary of Defence Acquisition Council)

Air Marshal (Dr) Rajeev Sachdeva (Retd)

+ postsBio ⮌

Commissioned on 11 Dec 1981, was alumnus of Flying Instructors’ School, College
of Defence Management and National Defence College. Cat ‘A’ Qualified Flying
Instructor was also an Air Force Examiner with over 7200 hours on various Transport and Trainer aircraft.

Important Appointments held includes, Command of An-32 Squadron, AOC (Base
Commander) of Chandigarh Airbase, Chief Instructor at Fixed Wing Training Faculty,
Centre Director (Aviation) at NTRO (an intelligence agency) and Senior Air Staff Officer, HQ Southern Air Command.

In Joint-Services institution he served at Intelligence, Training, Operations,
Policy Planning & Force Structuring. He was also the Commandant of College of
Defence Management, which received the President’s Colours last month. He raised the Defence Cyber Agency, Defence Space Agency and the Armed Forces Special Ops Division.

Holds a Doctorate, M Phil, Masters in Management and B.Com (Hons), Certified
‘A’ Project Manager by International Project Management Association, a Distinguished
Fellow at USI, Centre of Air Power Studies, Centre for Land Warfare Studies & at the
academic council of i2p2M (an International Project Management training institute).

He is also certified as a Management Instructor by All India Management Association.
He has published papers for various journals, including chapters in books published
by NDC, CAPS, USI and Strive India. Lectured in Military, Civil and Academic Institutions.

Doctorate was in Business Management from Osmania University and the research topic was on Decision Making in Aviation.

Recipient of Presidential medal, Ati Vishist Seva Medal and Commendation by the
Chief of the Air Staff.

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