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Shri Rajnath Singh invited investment from domestic industries & foreign original equipment manufacturers in the Indian defense sector

Raksha Mantri Shri Rajnath Singh invited investment from domestic industries and foreign original equipment manufacturers (OEMs) in the Indian defense sector and asked them to take advantage of the opportunity to integrate into global supply chains during the ‘Invest for Defence’ investor event. held as part of the 12th DefExpo in Gandhinagar, Gujarat on 20 October 2022.

Referring to the enthusiastic participation of domestic industry and corporates, Raksha Mantri said the confidence of industry stakeholders is encouraging and reflects their faith in the Indian defense sector. He said that this is a golden period for the Indian defense industry, which will be on the rise in the coming years. Sharing the government’s future plans for the defense sector, he said the aim is to increase defense production from USD 12 billion to USD 22 billion by 2025. This provides unparalleled opportunities for industry growth in the coming years, he added.

Economic development and security

Shri Rajnath Singh challenged the earlier view of the dichotomy between economic development and security, arguing that they were complementary. He noted that this approach has changed over the past few years and now the two concepts are integrated because they reinforce each other. “Today, the nation is integrating and moving forward with these two complementary capabilities and making unparalleled improvements in both,” said Shri Rajnath Singh. He added that economic and strategic capabilities are essential for the development of science and technology, health, agriculture, trade and commerce.

Highlighting the achievements of the domestic defense industry

Highlighting the achievements of the domestic defense industry, Raksha Mantri said it has demonstrated its capabilities by building fighter jets, aircraft carriers, main battle tanks and attack helicopters and has gained experience in further building this ecosystem. “This experience will help in supporting and developing defense weapons/systems for future generations,” he added. He termed DefExpo 2022 as an excellent platform for existing and potential investors to be a part of the phenomenal growth of the Indian defense industry.

Shri Rajnath Singh noted that it is natural for investors to seek profit and offered a value proposition. He said the country has skilled human resources and a healthy population and the government has taken several steps to further strengthen this aspect. He cited financial measures that allowed banks to lend, increased the availability of capital and led to the creation of a culture of venture capital funding.

Defense Excellence (iDEX) and Technology Development Fund

On technology, Raksha Mantri added that the government has improved lab-industry linkages for organizations like CSIR and DRDO and introduced initiatives like Innovations for Defense Excellence (iDEX) and Technology Development Fund to provide financial support for modernization and innovation. in products, systems, processes for the armed forces. Foreign direct investment norms in the defense sector have been liberalized to 74% through the automatic route and 100% through the government route and trading in stock markets has become more transparent, benefiting defense companies as well, he said.

Shri Rajnath Singh added that the government has allocated one-fourth of the defense R&D budget for industry-led R&D to encourage private players. He said that providing markets to industry is part of the government’s commitment to build ‘Aatmanirbhar Bharat’. “To increase the participation of domestic industry in the defense sector, the government has earmarked 68% of defense capital acquisition for domestic procurement for 2022-23, which is around Rs. 85,000 crore and 25% of it has been earmarked for domestic private industry,” he said.

Raksha Mantri pointed out that all these measures have increased defense exports in the last few years. He reiterated the unlimited growth potential of the Indian defense industry and urged businesses to invest in the sector. ‘Invest for Defence’, the first ever marquee event of the Ministry of Defence, was aimed at promoting investment in the country’s defense sector by both Indian industry and foreign OEMs.

Earlier, a panel discussion was held with the Chiefs of the three armed forces, DG (Acquisition), and CEOs of Airbus, Lockheed Martin, SAAB, Adani Defense & Aerospace, Bharat Forge and L&T. The Indian Air Force has informed that there will be huge opportunities for the industry for indigenous security-critical network infrastructure, with 62,000 lines likely to be available for indigenization in the next 10 years. The Army said it is undergoing a major modernization that is leading to a huge range of opportunities. Two systems – man-portable anti-tank guided missiles and very short-range missile systems – are an urgent requirement, along with consumables such as small arms.

The Director General (Acquisition), MoD informed that the procurement process is undergoing an overhaul and the Ministry of Defense is preparing a USD 50 billion AoN bank next year. During the discussion, Adani Defense & Aerospace envisaged a huge investment of Rs. 5,000 crore in the priority areas of information processing, AI/ML, unmanned systems, etc. The company further said it is investing in the UP Defense Industrial Corridor to set up ammunition facilities. She also shared a plan to set up the largest maintenance and repair operations (MRO) facility to serve both defense and civil sectors.

Lockheed Martin further shared its plans to set up MRO and Multi Role Fighter Aircraft facilities in the country and integrate local manufacturers into the global supply chain. SAAB India also announced that it plans to start production of launch vehicles in India by 2024. iDEX also organized a panel session on ‘Indian Opportunity – Aerospace & Defence’ during the event. The panellists comprising of leading venture capitalists, financial institutions and corporates spoke about their outlook for the Indian defense sector and reaffirmed their commitment to achieve Atmanirbhar Bharat in the aerospace and defense sector. On the sidelines of the event, a B2B session on “Opportunities from Big Platforms” was held in coordination with IIFL Finance.

CMDs of DPSUs and CEOs of large private companies, startups and SMEs attended the session. An Investor Demo pitch was also organized in collaboration with SINE IIT Bombay where iDEX Deeptech Startups showcased their technologies to investors. After the meeting, DIO received investment proposals from several investors. Participating investors included Ravinder Pal Singh – Partner Kalaari Capital, Vishesh Rajaram – Founder Speciale Invest, Satya Bansal – Founder Blue Ashva Capital, Arjun Sinha – Partner AP & P, Vikram Jain, AVP – IDBI Capital and Dhrubashish Bhattacharya – Director MSME, Bank from Baroda.

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