MSMEs Drive India’s Defence Export To New Highs

India’s defence sector is modernising as it strives for self-reliance, with a greater emphasis on innovation and the development of indigenous technologies.

India has set a target of more than tripling its annual defence exports to Rs 35,000 crore by 2024-25 and Micro, Small and Medium Enterprises (MSMEs) have emerged as the driving forces behind the defence export. In 2022, over 10,000 MSMEs were actively involved in increasing India’s defence production.

Within the realm of defence production, there has been an increased traction towards local manufacturing, aimed at meeting India’s heightened armed forces requirement.

Against this backdrop, MSMEs are being integrated to meet the quality requirements of the defence sector through certifications. With the entry of MSMEs into the supply chain, there has been a 200 per cent hike in the number of licences issued to the industry.

Navigating beyond the constraints of the past, defence production units are signing long-term contracts, for up to 10 years with MSME players. Government portals like Srijan have opened new avenues to indigenisation–over 30,000 defence-related items have been made available to MSMEs.

President of PHDCCI, Sanjeev Agrawal says that the Indian defence sector with more than 10,000 MSMEs, plays a significant role in defence exports which are involved in various stages of the supply chain from manufacturing critical components and sub-assemblies to providing services and technologies.

MSMEs are hubs of innovation and technological development that contribute to enhancing the indigenous manufacturing capabilities and competitiveness of India’s defence industry in the global market, Agrawal added.

Defence exports from India are at an all-time high, exceeding Rs 20,000 crore within the current fiscal. This growth is all set to rise further in the coming years, making it an untapped hub of opportunities for MSMEs.

According to Rudra Shriram, Chair of Defence and HLS Committee at PHDCCI, MSMEs are one of the key contributors that lies in their ability to cater to specialised and niche requirements of the defence sector, ranging from components to technology solutions. MSMEs often act as suppliers to larger defence firms, providing them with vital parts and subsystems that are integral to the production of defence equipment, Shriram says.

India’s defence industry has been on an exponential growth trajectory, characterised by massive transformation, from manufacturing to exports. With MSMEs emerging as the disruptive force behind the country’s quest for self-reliance, the defence sector remains no exception to its powerful impact.

As these enterprises continue to innovate, advance and develop, it is quite evident that India is all set to lead the world in the defence sector.