Make in India

Manufacturing is one of the high growth sectors of India. With the launch of Make in India initiative in 2014, we have seen some significant improvements in the defense manufacturing sector. Indigenous Defense Manufacturing is one of the key focus areas of the Make in India initiative. At present, around 60% of our defense requirements are met by imports. During the last three and a half years, the Indian government has taken a number of policy-based initiatives to boost the indigenous defense production, technology upgradation, and defense export capabilities. The amendments to the Procurement Policy, Offset Policy and improvement in the procedures for the grant of industrial licenses are encouraging the domestic players particularly the MSMEs to leverage their capabilities. In his Union Budget 2018-19 speech, Finance Minister Mr. Arun Jaitley has said the government is working to bring an industry-friendly defense-production policy for 2018 aimed at promoting indigenous production by the public and private sectors, including micro small and medium enterprises, or MSMEs.

In the defense manufacturing industry generally, the global Original Equipment Manufacturers (OEMs) prefer to work with SME/MSMEs because of their innovative capabilities, flexibility, agility and lower overhead costs. Our country’s extensive modernization plans, growing defense needs, increased focus on timely execution and improved policy etc. have opened up a plethora of opportunities for the entry of foreign players and now with the New Strategic Partnership Policy kind of initiatives, Indigenous Defense Manufacturing will definitely get a boost.

For the first time, Indian states are launching policies to ease business regulations and promote indigenous defense manufacturing. A few days back, the Maharashtra government approved a defense and aerospace production policy. The state government will create Rs 1,000 crore (approximately $150 million) in initial working capital to the small-to-medium enterprises, or SMEs in those sectors. Under its defense and aerospace policy, the government plans to establish “defense hubs” at Pune, Nagpur, Ahmednagar, Nashik, and Aurangabad. The state will offer financial concessions and incentives to develop indigenous defense technologies and to establish “anchor units” to build an ecosystem for defense MSMEs. Other states such as Uttar Pradesh and Tamil Nadu are also drafting their aerospace and defense manufacturing policy too. In the Union Budget 2018-19, the government has made an announcement about establishing two Defense Industrial Corridors in the country. 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 trajectory of Make in India is looking good and India is poised to become a defense manufacturing hub.”

(Devsena Mishra)