Thursday, June 13, 2024

What Does INS Vikrant Mean For MSME Industries In India?

Lieutenant General VG Khandare (r) PVSM, AVSM, SM

Lt Gen. VG Khandare (r), Principal Advisor to MoD

INS Vikrant has an emotional appeal for India. The name resonates in the heart and soul of every patriotic Indian. Role played by the previous generation INS Vikrant during the various wars has been significant. Any aspiring nation dreaming of claiming its rightful place in the comity of nations should look at maritime security especially due to the intimate connection with economics. Nations have made choices of structuring their navies using various combinations of vessels based on threat perception and their preferred war waging methodology. 

At a crucial point in time some aspiring nations with major maritime interests would aspire to add the aircraft carrier option. Acquiring an aircraft carrier from some major power is an option. The two difficulties for such nations are; indigenised manufacturing of an aircraft carrier and training its human resource to harness the potential of such potent platforms operationally and technically. India wisely continued with its aircraft carrier programmes so as to retain proficiency for generations of its human resource. 

Currently and futuristically, India definitely needs its navy to be proficient in Carrier Battle Group operations. Capabilities do not come easily and immediately. There are nations which had to commence their journey with aircraft carriers fairly recently, China is a case in point. India has a lead in this. Should we lose this capability, it will be a big problem rebuilding this specialisation. The debate about how many aircraft carriers we must have is a different issue, what is important is that we have an indigenously built aircraft carrier, indigenous manufacturing ecosystem with a large contribution from Micro, Small and Medium Enterprises (MSME) which are the backbone of Indian economy and a pillar of strength to the vast middle income group of Indians which is the New India.

INS Vikrant, a floating city, adds to India’s maritime muscle is an apt statement for the security experts but over 100 MSMEs contributing to the indigenisation effort means the project adds to the Indigenius industry muscle as well. The Ministry of MSME should be upbeat about it and so should the various associations of Indian MSMEs. This maiden venture at Cochin Shipyard has given an impetus to many visible and invisible contributions from the MSME sector. 

A large degree of skilling, upskilling and reskilling of human resources has taken place with this maiden venture. In the journey towards Atma Nirbhar Bharat Initiative a large number of Public Sector Undertakings (PSU) as well as Research and Development (R&D) experts have taken the assistance of MSMEs. These small entities are the round the corner quick fix solution providers who are normally the first responders with a cheap affordable and workable solution. Big business houses whether in India or abroad have a certain level of dependence on the MSME sector. The success of INS Vikrant manufacture at Cochin shipyard has revived the faith of a large number of MSMEs in the governments intent to revive and sustain the expertise and efficiency of MSMEs particularly so when they were going through tough times post COVID period. The easy way out of importing components was not an option and indigenous MSMEs were the first choice. In rare cases there would be exceptions due to technology challenges.

Survival and success of MSMEs, especially those in the defence sector, depends on many factors and many actors. It’s not only the government fully responsible to keep the MSMEs afloat. Even within the government it is not only the user Ministry like the Ministry of Defence (MoD) in this case which is solely responsible and capable of sustaining the MSME Sector. The Ministry of MSME could play a lead managerial role. It is the ‘whole of nation approach and whole of government approach’ involving the public and private sector, multiple Ministries, R&D entities, academia and the MSME associations which have to keep the MSME Sector alive and progressing.

Government officials have a big responsibility to keep these small cells of the huge Indian economy surviving. Particularly, in the defence sector where scales of consumption are limited and commercially unviable, the MSMEs have to be plugged into multiple civil and military domains, therefore matured handling by decision makers in the defence sector is a realistic expectation of the MSMEs.

The future of the Indian Defence Forces being self-reliant and simultaneously strengthening the Indian economy to reach the $5 trillion mark in the next couple of years has to be a simultaneous progression. The MSMEs will play a major role in this quest. Even to achieve the $5 billion mark in defence exports the MSMEs are going to play a major role. The Indian Armed Forces have to be combat ready at all times while being self reliant.

Capability voids have to be identified and challenges have to be thrown to MSMEs with meticulous guidance and prompt payments considering the sensitivity of the non government sector. Frequent and candid dialogues in an atmosphere of trust and team spirit will be in national interest. Suitable modifications to the processes will overcome the colonial mindset of mistrust and mutual suspicion.

Chief of the Naval Staff Admiral R Hari Kumar voiced the Navy’s resolve for India@100 to become completely self-reliant by 2047, consisting of ‘Made-in-India’ ships, submarines, aircraft, unmanned vessels and systems and remain a ‘Combat Ready, Credible, Cohesive and Future-Proof Force’. Self reliance is possible only with a vibrant MSME sector in place with a healthy mix of production and service sector.

The Government of India has demonstrated its commitment and taken the following policy initiatives for promotion of Micro, Small & Medium enterprises (MSMEs) in defence sector (As Posted On: 1 AUG 2022 2:22PM by PIB Delhi):

● In the Defence Acquisition Procedure 2020, there are specific reservations on Orders up to Rs 100 crore/year for MSMEs.

● An innovation ecosystem for Defence titled Innovations for Defence Excellence (iDEX) has been launched in April 2018. iDEX is aimed at creation of an ecosystem to foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, Start-ups, Individual Innovators, R&D institutes and Academia and provide them grants/funding and support to carry out R&D which has potential for future adoption for Indian defence and aerospace needs.

● The Defence Offset guidelines have further paved the way for proactive participation of MSMEs of India by incorporating a scheme of multipliers of 1.5 for engaging MSME as Indian Offset Partners (IOP), which promotes their integration in the global supply chain.

● MSMEs are important partners in DRDO projects and DRDO transfers technologies to them. They are important partners in the industry ecosystem for the production of DRDO developed products. DRDO through its Technology Development Scheme (TDF) funds industries, especially Start-ups and MSMEs up to an amount of Rs 10 crore, for innovation, research and development of Defence Technologies in the field of Defence and Aerospace.

● Public Procurement Policy for MSEs Order 2012, notified by the MSMEs has also been adopted by all Defence PSUs.

● Department of Defence Production (DDP) conducts outreach programs in various parts of the country to interact with Industry Associations, Industry, especially MSMEs and academia, to spread awareness about the potential export opportunities. A scheme aimed to promote MSMEs in defence is in place. Under this scheme, conclaves/seminars are being organised in Tier-II and Tier-III cities across the country having strong industrial MSMEs presence with the support of the DDP.

● Regular interactions are taking place to settle the grievance of vendors at DPSUs. Defence Investor Cell has been opened in DDP to address the issues being faced by industry partners, especially MSME industry partners.

All in all, INS Vikrant is a demonstration of the road ahead for indigenisation in Defence Sector and opportunity creations for MSME Sector. The national economy can grow at a rapid pace with the whole of Government approach and whole of nation approach to hand hold MSMEs. This will require a change of mindset of the stakeholders especially the decision makers and the support mechanism in the entire ecosystem. The Government of India’s commitment can be implemented with users, researchers, designers, developers and production agencies contributing their bit in patronising the Indian MSMEs. 

The Ministry of MSME and the associations of MSMEs will have to play a larger role in the Defence Sector to ensure solutions to every problem through innovations, creativity, knowledge, cooperation and collaboration with various entities in civil and military domains to make the business ventures self-sustaining and profit generating. The future of the Indian economy will have a significant contribution from MSMEs, similarly Indian Security can be ensured better by being self reliant at the earliest, the best way to do so is to be Atmanirbhar Bharat.

The article is written by Lt Gen VG Khandare, PVSM, AVSM, SM currently the Principal Advisor to the Ministry of Defence, Government of India. The views are personal and not attributed to the Government of India. 


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