Last week, India’s biennial defence manufacturing exhibition, Defexpo 2020, was held in Lucknow, heart of the Uttar Pradesh defence-industrial corridor. UP CM Yogi Adityanath described it as the ‘Maha Kumbh’ of defence manufacturing.
He was fascinated perhaps by the scale—unprecedented, with over 1,000 exhibitors, 15 lakh visitors, daily live demonstrations of military capability in mock operational setting, military cooperation-conference of defence ministers of 30 countries. The Ministry of Defence, Department of Defence Production and the UP government had done a commendable job. The growing array of indigenous military hardware on display indicates that Make in India is making a difference in the defence sector.
India was the highest defence importer until 2018, when it climbed down a step from its long-held position. India’s defence sector has been open to direct private sector participation since 2001, but there wasn’t enough enthusiasm due to an indifferent policy and lack of access to users, among other reasons.
Over the past five years, however, a plethora of policy reforms sowed the seeds for wider private sector participation, to bridge the gap between defence modernisation and indigenisation. Since 2001, of the 452 industrial licences issued, 109 were issued in the past three financial years.
The proposed investments indicated in the licence applications from 2015 to 2019 are worth Rs 13,743.53 crore. In the same period, the government has accorded Acceptance of Necessity (AoN) to 204 proposals worth Rs 4,04,880 crore, under categories enabling indigenous capital procurement, in which Request for Proposal is issued only to Indian industries.
The vast difference, however, between the AoN worth (Rs 4,04,880 crore) and the proposed investment (Rs 13,743.53 crore), clearly indicates scope for much more participation, particularly from micro, small and medium enterprises (MSME).
Some 200 MoUs have been signed during Defexpo 2020. Going forward, while actualising these MoUs, it is imperative that more and more MSMEs are co-opted.