Recently, the defence sector of India has undergone a tremendous evolution, and Micro, Small and Medium Enterprises (MSMEs) play a central role in transforming this new sunset. Such enterprises have blossomed into the backbone of India’s defence equipment manufacturing ecosystem as they contribute significantly towards self-reliance in defence production for India. 

The article focuses on the role of Indian MSMEs in the component manufacturing of the defence equipment sector and also aims to understand their contribution, challenge, and variety of products they manufacture.

The Rise of MSMEs in India’s Defence Sector

A Growing Presence

There has been enhanced participation of MSMEs in India’s defence sector in recent years. By 2022, nearly 10000 MSMEs will directly involve themselves in the future of India’s defense production. New paradigms of innovation open such as South African defence landscape and future changes in historic competitors into the strength of India’s position as world’s largest defense producer.

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Initiatives by Government for Growth

Policies and programmes initiated by the Indian government majored in home-grown designs, development, and manufacturing of defence equipment. These initiatives aim at promoting self-reliance in defence manufacturing and technology. Some of the key initiatives are:

• Defence Acquisition Procedure (DAP) 2020: Prioritizes procurement of capital items from domestic sources.
• Positive Indigenisation Lists : Enumerating 411 items for the Services and 3,738 items for Defence Public Sector Undertakings (DPSUs) to induce production in the country.
• Simplification of Industrial Licensing: Streamlining processes plus extended validity periods.
• FDI Liberalisation: Allows automatic route for investment up to 74%.
• Inventions for Defence Excellence (iDEX) Scheme: Aims to encourage and guide start-ups and MSMEs for driving the innovation process in defence.
• SRIJAN Portal: It is an indigenisation platform for Indian industry including MSMEs in defence manufacturing.

All these have made an environment conducive to MSMEs and the manufacturing industry to innovate, design, and produce state-of-the-art solutions for India.

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Key Areas of MSME Contribution

MSMEs have participation in various aspects of defence defence equipment production. These include:

• Weapons and Ammunition
• Fighter Aircraft Components
• Helicopter Parts
• Missile Systems
• Warship Components
• Submarine Parts
• Armoured Vehicle Components
• Radar Systems
• Communication Systems
• Surveillance Equipment

 Also Read: Opportunities for Indian MSMEs in Defence Supply Chain

Notable MSMEs in the Defence Sector

Many MSMEs have had really big breakthroughs in defence manufacturing. Some such examples are as follows:

1. Logic Fruit Technologies

This facility develops advanced embedded solutions in high-performance computing. Logic Fruit Technologies is all about innovative designs and technology. They provide complete solutions for multiple high-speed digital protocols and communication buses.

2. Bharat Dynamics Limited (BDL)

Not a wholly micro, small or medium-sized enterprise, but BDL works with lots of smaller enterprises. It has been in the business of making guided missile systems and allied equipment for the Indian Armed Forces.

3. Bharat Electronics Limited (BEL)

BEL is a leading defence electronics firm in India developing sophisticated electronic defence equipment systems for the Indian Armed Forces. Their primary fields of focus are radars, communication electronics, and weapon systems.

4. Tata Advanced Systems Limited (TASL)

Tata Advanced Systems Limited is part of the Tata Group, focusing on aerospace, defence electronics, and other high-tech defence solutions. They partner up with foreign defence companies and innovate their perspectives on defence.

5. Paras Defence & Space Technology Limited

From 40 years, Paras Defence & Space Technologies has played an importance role in defence and space in India. This company focuses on excellence in R&D and state-of-the-art manufacturing.

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List of Products Manufactured by Indian MSMEs in the Defence Sector

MSMEs in India are engaged in manufacturing several defence components and products. Here is an exhaustive list of some salient items:

1. Sarvatra Kavach: Portable an all-weather modular bullet-resistant jacket.
2. Individual Underwater Breathing Apparatus: It is needed for the special operations in navy.
3. LED-based Taxi, Landing, and Navigation Lights: Used for aeroplanes and naval vessels.
4. Communications Systems: Radios, antennas, and satellite communication equipment are also among the systems.
5. Electronic Warfare Systems: Jamming devices and countermeasure equipment.
6. Optical and Electro-optical Equipment: Night vision devices, thermal imagers, and laser range finders.
7. Composite Materials: In the structures for aircraft and naval vessels.
8. Precision Machined Parts: Weapon systems as well as various platforms.
9. Hydraulic and Pneumatic Systems: For aircraft, tanks, and other military vehicles.
10. Special Coatings: Radar absorbers and anti-corrosion coatings.
11. Components for Uninteresting Aerial Voyager (UAV): Airframes, propulsion systems, and control units.
12. Components of Ammunition: Casing, fuse, and propellant.
13. Personal Protective Equipment: Helmets, body armor, and protective suits.
14. Field medical equipment: Portable medical devices and first-aid kits.
15. Tactical Gear: Backpacks, harnesses, and load-bearing equipment.
16. Vehicle Components: For military trucks, armored personnel carriers, and tanks.
17. Navy Equipment: Pumps, valves, and shipboard systems.
18. Aerospace Components: Fasteners, brackets, and structural elements for aircraft.
19. Missile Components: Guidance system, propulsion piece, and warhead casing.
20. Radar Components: Antenna elements, waveguides, and signal processing units.

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Challenges Faced by MSMEs in Defence Manufacturing

Some challenges with respect to growth and potential are as follows:

• Financial Problems: Most of the MSMEs still suffer from a lack of prospective needs, and that is a barrier for most of them.
• Payments: Part of that efficiency will not enable most of the entities to run smoothly.
• Technical Expertise: The technical requirements of defence products really go beyond some MSMEs.
• Complex Methods of Acquisitions: The security acquisition process is very much twisted and intimidating, especially for smaller companies.
• Regulatory Compliance: Quite a hurdle for smaller-sized companies is crossing the minefield of guidelines.
• Larger Competition: The smaller entrants are facing stiff competition from larger established defense manufacturers.
• Advanced Technology Access: This entire universe of rapidly changing defense technology has easily become too much for many smaller firms.
• Export Regulations: These include measures restricting exports, limiting the international market opportunities for MSMEs.

Government Support and Future Prospects

Government of India has recognized the importance of MSMEs in building a sound defence manufacturing ecosystem. Multiple initiatives aimed at promoting these entities are:

• Budget Provision: The Union Budget FY24 earmarked Rs 1,500 crore for start-ups and MSMEs as part of total allocation under procurement through domestic private industries.
• Innovation Schemes: Innovation for Defence Excellence, Technical Development Fund and Make Project of Defence Acquisition Procedure 2020 are the flagship programs that promote innovation by MSMEs.
• Inclusion in the Annual Network Supply Chains: This is introduction of outreach programs across the country in specific schemes for favoring the Indian MSMEs in defence.
• Ease of Doing Business: Reduction of processes and regulations reducing the duress for defence MSMEs is being worked on.
• Capacity Building: Initiatives aimed at imparting technical knowledge and assistance will be extended to MSMEs on choosing the correct equipment for its manufacturing.

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The Road Ahead

Indian MSMEs are poised for a bright future in the field of defence. The government has set a defence production target of USD 25 billion by 2025, along with an export target of USD 5 billion. Therefore, the role of MSMEs is going to be even more important. The future order placement opportunity in an estimated USD 138 billion Indian Defence equipment sector over the upcoming 10 years is indicative of a vast landscape for MSME growth and innovation.

This potential must be tapped through focused efforts at addressing funding gaps, regulatory compliances, and strengthening technical capabilities. With the innovation and expansion in the product range, these MSMEs are bound to play an increasingly vital role in the country’s journey toward self-reliance in defence manufacturing.

Conclusion

Indian MSMEs being the unsung heroes of the Atmanirbhar Bharat initiative are now coming forward in the defence equipment sector and have contributed from high-tech electronic systems to very vital mechanical parts manufacture to be used in a defence project. Not only do these enterprises grow and innovate, but they also help India to strengthen defence capability further and, of late, gain a lot towards the economic growth and growth in technology. While such develop into cases in point to prove that success in defence manufacturing MSMEs is possible in line with the growing technological prowess and entrepreneurial spirit of India.

MSMEs thus find in their government support and encouragement in overcoming constraints, and they are likely to continue further to having a global leadership in defence component manufacture and empowering the vision of India as a major defence exporter and self-sufficient in defence production.