Govt Policies Boost Defence Startups in India
Initiatives of the Central Government like iDEX, Policy for indigenization, liberal licensing and Technology Development Fund have helped startups dealing with defence production and indigenisation to thrive in India over the last three years.
India has witnessed a surge in startups dealing with defence production and indigenisation of imported equipment during the last three years. This is the result of several initiatives launched by the Central Government to remove entry barriers for private industry, including startups in the defence domain. Details in this regard were provided by Minister of State for Defence Shripad Naik in a written reply to Vijay Goel in the Rajya Sabha. Some of these initiatives are: Innovations for Defence Excellence (iDEX) framework was launched by the Prime Minister in April 2018, with the aim for achieving self-reliance and to foster innovation and technology development in Defence and Aerospace by engaging Industries including MSMEs, startups, individual innovators, R&D institutes and academia.
Under iDEX, the projects or problem statements are identified based on the requirements projected by the Armed Forces, OFB & DPSUs. The selected applicants are eligible for grants up to Rs 1.5 crore for development of the prototype. Similarly, in Make-I category (Government funded) of development of prototype of defence products/ platforms, projects not exceeding development cost of Rs 10 crore are reserved for MSMEs / startups. Similarly, under Make-II category of development of prototype of defence products/platforms, projects not exceeding development cost of Rs. 3 crore are reserved for MSMEs/Start-ups. The ‘Make-II’ procedure has been simplified to encourage wider participation of Indian industry, with impetus for MSME / startups sector and timely induction of equipment into the Indian Armed Forces. The ‘startups’ recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) from time to time, are eligible to participate under ‘Make-II’ procedure. In addition, the framework for implementation of ‘Make-II’ at OFB and DPSU level has also been notified. More than 2,500 items have been notified by OFB and DPSUs for development under ‘Make-II’. Along the same lines, the Department of Defence Production has notified 127 items under Public Procurement Order 2017 issued by Department for Promotion of Industry and Internal Trade (DPIIT).
The Government has also notified a ‘Policy for indigenisation of components and spares used in Defence Platforms’ in March 2019 with the objective of creating a domestic industry ecosystem. Yet another initiative is the liberalization of the industrial Govt policies boost defence startups in India Initiatives of the Central Government like iDEX, Policy for indigenization, liberal licensing and Technology Development Fund have helped startups dealing with defence production and indigenisation to thrive in India over the last three years. 17 licensing regime for Indian manufacturers. This has reduced entry barriers for new entrants in defence sector, particularly SMEs. The Indian Government has revised the FDI Policy and under the revised policy, Foreign Investment up to 49 per cent is allowed through automatic route and above 49 per cent under the Government route. Another important decision involves the Defence Research & Development Organisation (DRDO), which has evolved a new industry-friendly ToT policy for transfer of technologies developed by it to industries. DRDO has also promulgated a new patent policy to facilitate Indian industries to get free access to use DRDO patents.
The DRDO has also launched a programme termed ‘Technology Development Fund’ (TDF) for meeting the requirements of Tri-Services, Defence Production and DRDO. The scheme has been established to promote selfreliance in Defence Technology as part of the ‘Make in India’ initiative by encouraging participation of public/private industries, especially MSMEs. A Defence Investor Cell (DIC) was set up by the Department of Defence Production (DDP) in January 2018 to provide help, support and guidance to defence industry, MSMEs and start-ups. During 2017-18, DDP notified 275 items which were previously exclusively sourced from OFB, for sourcing from open industry and 141 items have been placed on Government e-Marketplace. The test facilities/ infrastructure available with various Government agencies (OFB, DPSUs, DRDO, DGQA, DGAQA & SHQs) have been made available to private sector with the objective of assisting them in design & development of defence systems. The details of test facilities, procedure and other terms & conditions are available on websites of respective Government agencies.
Third Party Inspection
To align with the Government of India initiative to promote ‘Ease of Doing Business’ for MSMEs and private sector and achieve the national vision of ‘Make in India’, the Department has formulated a policy document on ‘Utilisation of Third Party Inspection Services’ for effective administration of inspection function of out-sourced work with involvement of third parties for inspection services.
‘Mission Raksha Gyanshakti’
The Government has also launched ‘Mission Raksha Gyanshakti’ with the objective of encouraging IPR for selfreliance in defence. IPR is the key enabler for developing an ecosystem of innovation and indigenization. As part of the Mission, an IPR Division has been constituted in DDP.