MSMEs, Start-ups Crucial for Atmanirbharta in Defence

The main purpose of public and private defence sectors is to ensure that the three wings of our forces are at all times equipped to match the firepower of the adversary and our men do not feel handicapped. In this era of hi-tech warfare, it is critical that technologies and competencies of our industry are aligned and developed in tandem with the needs of our forces

Opinion

By Dhanendra Kumar

Achieving self-reliance in the country’s defence needs is of critical importance. It has been noticed earlier that during a crisis when the needs of arms, ammunition, spares and equipment is urgent and critical, the suppliers sometimes back out, dither or raise prices. The requirements of our forces have to be anticipated and adequately planned for various eventualities and must be met.

India is one of the world’s largest importers of defence equipment. Although our defence sector was opened up for private players about two decades ago, a lot is yet to be achieved. It must be ensured that all the three wings of our forces are at all times equipped to match the firepower of the adversary and our men do not feel handicapped; and there is availability of needed surge capacities to sustain possible extended periods of operations. Besides, in this era of hi-tech warfare, it is critical that technologies and competencies of our industry are also aligned and developed in tandem with the needs of our forces.

The government institutions involved in research, innovation and defence excellence like DRDO, iDEX (Innovations for Defence Excellence) must come forward to share their technologies, incubate and nurture start-ups

As the government is the only buyer in most situations, there is a need for institutional reforms and nurturing a culture of trust and long-term partnership to proactively develop the private sector. There are several reputed companies in the private sector that are like national assets — Tatas, L&T, Bharat Forge (Kalyani Group), Mahindra Aerostructures, private shipyards (ABG, Reliance) etc., and many more reputed names are getting into the arena.

There is, however, a need for consistency and predictability in policies to enthuse private players to invest. The government institutions involved in research, innovation and defence excellence like DRDO, iDEX (Innovations for Defence Excellence) must come forward to share their technologies, incubate and nurture start-ups. Sometimes defence PSUs consider private players as competitors or adversaries. This feeling must change and they should work in tandem in the national interest. In fact, defence PSUs should help in building stable and strategic partnerships with MSMEs and start-ups. There should be a periodical survey and capability mapping of our entire private sector ecosystem to review and update the negative list for imports and encourage local production.

There is a strong need for encouraging MSMEs and start-ups in the defence eco-system to achieve self-reliance. These enterprises built by young entrepreneurs have a deep emotional and passionate connect with the defence of their motherland. Besides, it has been found that sometimes there is a preferential need for smaller and lighter platforms that are designed with flexibility and intelligence to cater to a given situation. Start-ups are scalable companies, and with support and hand-holding can deliver strategically strong, customised and innovative products.

Sometimes defence PSUs consider private players as competitors or adversaries. This must change. In fact, defence PSUs should help in building stable and strategic partnerships with MSMEs and start-ups in the national interest.

At times, several of these companies face a near-death situation due to lack of finances. There is a need for creating an “Indian Defence Finance Corporation (IDFC)” on the lines of the “Indian Railway Finance Corporation (IRFC)” to raise bonds from the market. It should also be ensured that their cash flows are maintained and there are no delays in their payments. It is fortuitous that DPP-2020, which has now become DAP-2020, is one of the main helpful policy of the government, insulating start-ups from bigger players, and enabling them to legally participate in the “Make in India Policy” wherein defence has been identified as one of the most promising sectors, contributing to external and internal peace and security and socio-economic development of the country. By 2030, India’s Aerospace and defence industry is estimated to reach a market valuation of $70 billion.

To strengthen India’s defence efforts, the 15th Finance Commission made a host of recommendations in its report for the years 2021-22 to 2025-26. The panel suggested a non-lapsable modernisation fund of Rs 2.38 lakh crore for the five-years for defence and internal security. The government has given an in-principle nod to the setting up of the fund. The panel suggested the fund can have four sources of financing: transfer from the Consolidated Fund of India, disinvestment proceeds of defence public sector enterprises, proceeds from monetisation of surplus-defence land, and funds from sale of defence land likely to be transferred to state government and public projects in the future.

If we look at the early history of India’s defence industrialisation, this was mainly given to the state sector: Nine Defence Public Sector Units (DPSUs) along with 41 factories of the Ordnance Factory Board (OFB); Hindustan Aeronautics Limited (HAL) collaborated with foreign defence companies primarily from France, UK and Germany; Defence Research and Development Organization’s (DRDO) 50 establishments focused on research on various technologies in aeronautics, robotics, navigation and propulsion etc.

India’s ongoing military modernisation for advanced equipment has been largely fulfilled through imports. In the last decade, India imported defence equipment worth about $34 billion. The top five suppliers are Russia, US, Israel, France and UK. Under the “Make in India” policy, the government has launched an ambitious program to expand domestic production for a larger role to the private sector. Recently, the government has raised FDI in the defence sector to 74%.

To encourage the private sector, the Strategic Partnership (SP) model has been introduced wherein tie-ups will be forged between Indian and foreign defence companies to produce equipment like fighter jets, submarines, medium lift and utility helicopters, warships etc. The SP model is applicable for Tier 1 manufacturers. To encourage MSMEs from Tier 2 and 3 regions, procurement projects up to the development cost of Rs 10 crores (government funded) and Rs 3 crores (industry funded) will be reserved for them.

Sometimes defence PSUs consider private players as competitors or adversaries. This must change. In fact, defence PSUs should help in building stable and strategic partnerships with MSMEs and start-ups in the national interest.

Another step forward in encouraging defence start-ups is the stimulus given through the Defence Innovation Fund, established in 2017. Under this, HAL and BEL funded the setting up of the Defence Innovation Organisation (DIO), which promotes start-ups through the innovations for Defence Excellence (iDEX) program. Under this, a few solutions identified relate to individual protection systems, secure hardware encryption devices, GPS anti-jamming devices, unmanned surface and underwater vehicles, and 4G/LTE tactical local area network among others. This can help not only the huge homeland security market but also exports to friendly countries.

Modern warfare is based on technologically advanced platforms and cyber and other emerging digital technologies. These may include cyber-defence, blockchain, quantum computing, Artificial Intelligence (AI), Machine Learning (ML), swarming drones and additive manufacturing. With the advancement in Information Technology (IT) there are important implications in the threat landscape — deep fakes, Internet-of-Things (IoT)-based threat vectors, social engineering attacks etc., not just for causing the ‘fog of war’ but to attain complete privacy in a battle. This opens up new opportunities for Indian IT companies like Tata Consultancy Services (TCS), Tech Mahindra, Wipro and HCL Technologies. A joint public-private effort is needed to reorient the defence technology ecosystem. For example, Tech Mahindra has partnered with Israel’s Elta Systems to offer cybersecurity-based products.

There are several instances of successful innovations from the start-ups and MSMEs. Some of these are given below as an illustration:

CRON Systems

Gurugram-based CRON System is developing border security solutions. Founded in 2015 by young entrepreneurs Tushar Chhabra, Tommy Katzenellenbogen and Saurav Agarwala, CRON Systems initially began focusing on building laser walls for the BSF, expanding to include automation for drones, rovers and a central dashboard to control the applications through its command, control, communication & information (C3i) hub miCRON.

According to CRON System, its core product, the Kavach security system, uses multiple sensors such as time of flight cameras, mmWave radars and LiDARs to help ‘detect, track and classify’ intrusion up to 150 m ahead of the perimeter.

Asteria Aerospace

Bengaluru-based Asteria Aerospace is a robotics and artificial intelligence start-up that provides drone-based solutions to the military, paramilitary and police forces for security and surveillance purposes. The start-up was founded in 2012 by Neel Mehta and Nihar Vartak, who completed their B.Sc degree in Aerospace Engineering from Purdue University. The start-up also deploys its drones to provide end-to-end solutions for autonomous surveys, inspection and to monitor assets in industries working in the oil and gas, mining, construction and agriculture sectors.

Optimized Electrotech

Ahmedabad-based Optimized Electrotech is an electro-optic start-up providing security and surveillance solutions. It was founded in 2017 by Anil Yekkala, Dharin Shah, Kuldeep Saxena, Purvi Shah and Sandeep Shah. The start-up provides electro-optics systems that can be used for the surveillance of smart cities, satellite-based imaging, border surveillance, medical imaging, access control, machine vision, automotive (Advanced driver-assistance systems, i.e., ADAS) and consumer electronics.

The start-up’s InfiVision product series can detect a tank from a distance of 30 km. The start-up is going to soon launch its OmniVision product series, which will allow users to monitor a long-range area amid any weather obstacles such as smog, smoke, fog or darkness. Last year, Optimized Electrotech was announced as a winner of IDEX (Innovation for Defence Excellence), Make-in-India for Defence challenge.

VINVELI

The Iowa and Chennai-based Vinveli, founded in 2013 by Gokul Anandayuvaraj along with his friends Eshan Halekote and Yuan Qu, focuses on providing solutions to the aerospace and robotics industry. The start-up is involved in building Unmanned Aerial Vehicles (UAV) for both commercial and defence purposes. The Iowa Startup Accelerator-backed firm is focused on providing infrastructure, communication and service needed to encourage maintaining a fleet of drones and commercial and industrial applications of UAV technology. Vinveli, which counts the Ministry of Defence and Ministry of Home Affairs as its clients, deploys its drones for riot control and combat operations.

It also deploys them for commercial use in agricultural and wind farms. Acquiring defence-industrial self-reliance is crucial for India’s Atmanirbharta and the government is giving it a new, real and pro-active thrust. With an integrated support from all agencies concerned, we can expect India to achieve true self-reliance in this field and also export these technologies to other friendly countries, in the face of changing geo-political dynamics in the world.

–The writer is former Secretary of Defence Production, Ministry of Defence, Government of India. He can be reached at: dkumar1946@gmail.com

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