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Post easing of FDI regulations and Defence Acquisition Procedure 2020, India is now looking at tweaking other procedures as well to create an ecosystem for funding in defence sector, especially for MSMEs and start ups.
Throughout the three days of DefExpo, the Ministry of Defence has been trying to reach out to the industry expressing its intent on handholding for investment opportunities and bridging fissures, as India has set an export target of $5 billion by 2025.
“For investment in defence sector, the gestation period was high. The ministry has been trying to shorten the decision making process, besides integrating inter-ministerial interfaces for whole of the government response,” Lt General Vinod G. Khandare (retd.), Adviser in the Ministry of Defence, told businessline in an exclusive interaction.
Streamlining loops
Lt General Khandare listed out steps that have already been initiated like Innovations for Defence Excellence (iDEX) and amendment in Defence Acquisition Procedure 2020 to encourage Atmanirbhar Bharat and streamline decision loops in the defence ministry.
He also “exhorted big corporate houses like Tatas, Larson & Tubro (L&T) and Adani to become lead integrators for start-ups who have solutions”. At the same time, Khandare advocated that, like iDEX, the corporates should protect start-ups' IPRs.
Focus on indigenisation
Hindustan Aeronautical Limited, a defence PSU, has earmarked three percent to four percent of its profit for indigenisation. CB Ananthakrishnan, Director (Finance) and CFO who has been given additional charge of Chairman and CMD HAL, told the businessline, "the 3 to 4 percent annual profit would work out to ₹100 crore to ₹120 crore which the organisation has decided to earmark for indigenisation. "We are going for a very aggressive stand on indigenisation. First one is to create an ecosystem for self-reliance. Secondly, to get more competitive pricing because customers are also keenly looking at pricing," Ananthakrishnan stressed.
Defence minister Rajnath Singh, who supervised two seminars on investment in the military sector on Thursday, stated that India has already developed the culture of venture capital funding for start-ups in India. Speaking at the ‘Invest for Defence’ seminar, he said, “It’s crucial and important. Success of start-up-based innovation ecosystem can be seen from number of unicorns that have crossed 100.”
The Minister, in his address at another seminar jointly organised by US-India Business Council (UIBC) and Society of Indian Defence Manufacturers (SIDM), invited US companies to set up manufacturing units in India and develop technology collaborations to create a global supply chain free from vulnerabilities. Collaboration with US companies would be an important strategic force multiplier for India, Singh told the gathering of ministry officials, foreign delegates and exhibitors.
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