After easing FDI regulations and the defense acquisition process in 2020, India is now considering fine-tuning other processes to create an ecosystem for defense sector funding, especially for SMEs and start-ups. During the three days of DefExpo, the Ministry of Defense sought to reach out to the industry and express its intention to hold hands for investment opportunities and bridge the gaps as India sets an export target of USD 5 billion by 2025.
“For investments in the defense sector, the gestation period was high. Apart from integrating the inter-departmental interface for whole-of-government response, the ministry is trying to streamline the decision-making process,” Lt. Gen. Vinod G. Khandare (retd), Adviser, Ministry of Defence, told the business line in an exclusive interaction. .
Loop streamlining
General Khandare listed the steps already initiated such as Innovations for Defense Excellence (iDEX) and change in Defense Acquisition Procedure 2020 to boost Atmanirbhar Bharat and streamline decision-making loops in the Ministry of Defence.
He also “invited big corporate houses like the Tatas, Larson & Tubro (L&T) and Adani to become lead integrators for solution-driven start-ups”. At the same time, Khandare advocated that, like iDEX, corporations should protect the intellectual property rights of start-ups.
Focus on indigenization
Hindustan Aeronautical Limited, the defense unit of the PSU, has earmarked three to four percent of its profit for indigenization. CB Ananthakrishnan, Director (Finance) and Chief Financial Officer, who has been given the additional charge of Chairman and CMD of HAL, told Business Line, “3-4 per cent of the annual profit would come to ₹100-120 crore, which is what the organization has decided. “We are going to take a very aggressive stance on indigenization. The first is to create an ecosystem for self-sufficiency. Second, to get more competitive pricing as customers are also closely watching prices,” Ananthakrishnan pointed out.
Defense Minister Rajnath Singh, who oversaw two seminars on investment in the military sector on Thursday, said India has already developed a culture of venture capital funding for start-ups in India. Speaking at the ‘Invest for Defence’ seminar, he said: “It is fundamental and important. The success of the startup-based innovation ecosystem can be seen from the number of unicorns that have exceeded 100.”
Addressing another seminar jointly organized by the US-India Business Council (UIBC) and the Society of Indian Defense Manufacturers (SIDM), the minister urged US companies to set up manufacturing units in India and develop technological collaboration to create a global supply chain without vulnerability. Working with US companies would be an important strategic power multiplier for India, Singh told a gathering of ministry officials, foreign delegates and exhibitors.
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