Defense Industrial Corridor
Defense Industrial Corridor : The tagline of DefExpo 2018 is ‘India: The Emerging Defense Manufacturing Hub’, the objective of this year’s DefExpo is to brand India as a defense exporter of defense systems and components for all three services and showcasing strengths of India’s growing private industry and emerging Defense MSMEs base.
After opening up private investment and liberalizing foreign direct investment (FDI) in defense production, the Indian government plans to establish defense industrial corridors in the country. In the Indian Union Budget 2018-19, the finance minister has made an announcement about establishing the two Defense Industrial Corridors. The first Defense Production Corridor is planned to be established in Tamil Nadu and the second one will be set up in Uttar Pradesh state.
The first corridor called as Tamil Nadu Defense Quad will extend from Chennai, Hosur, Coimbatore, Salem and Tiruchirappalli. It will provide a great opportunity to the vibrant manufacturing sector in the State. According to the official press release, the MoD has initiated an exercise of industry interactions at all nodal points for the Quad. These interactions will involve senior officials from MoD, representatives of Hindustan Aeronautics Ltd., Bharat Electronics Ltd., Bharat Earth Movers Ltd. and Ordnance Factories, with the active participation of the local Small Scale Industries Associations and the State Government representatives.
The second defense industrial corridor was announced on the occasion of the Uttar Pradesh Investors Summit 2018. At the summit, PM Modi has said: “of one of the two defense industrial corridors mentioned in the budget, one is proposed in the Bundelkhand region of the state which will bring an investment of Rs. 20,000 crore and generate employment avenues for 2.5 lakh people.” The government has decided to extend the Uttar Pradesh’s defense corridor to Agra, Allahabad, Lucknow, Kanpur, Jhansi and Chitrakoot.
The Indigenous Defense manufacturing is one of the key focus areas of the ‘Make in India.’ A number of defense production units are active in these two states. The government’s decision to develop defense industrial corridor will boost the defense MSMEs of the UP and Chennai.
A few days back, Indian MoD has launched a Defense Investor cell to promote and facilitate defense manufacturing industry. Encouraging the start-ups and SME participation in the indigenous defense manufacturing is a key priority of the Defense Ministry. On January 16, the Defense Acquisition Council, chaired by Defense Minister Nirmala Sitharaman, announced a revised and simplified “Make II” procedure, in which some special provisions are given to MSMEs. The Ministry, in cooperation with the Federation of Indian Chambers of Commerce and Industry, or FICCI, has launched a platform called “Society for Indian Defense Start-ups,” or SIDS, as an institutional-support mechanism for development and funding of defense start-ups. The DPSUs and Defense Research and Development Organization (DRDO) labs will also collaborate with FICCI to nurture the MSMEs with the relevant expertise.
On 5th and 6th March, government has organized a ‘Defense Indigenization Expo’ where a number of representatives from MSMEs, Senior Officials from MoD and DPSUs had interactive discussions. In India, a number of MSMEs used to serve as the suppliers to DPSUs and they are the key players behind the success of some major defense manufacturing projects. According to the Dhirendra Singh Committee’s report (a committee set up by India’s Ministry of Defense in 2015), almost 80% of components, aggregates and assemblies of complex weapon systems and aircraft are made by MSMEs, which are part of supply chains. According to this report, nearly 6000 MSMEs in India are supplying the components and sub-assemblies to the DPSUs, ordnance factories, DRDO and private industries. To know about the key features of upcoming Defense Industrial Corridors in Chennai and Uttar Pradesh, click the below links…