Indian Defence Sector: The New Spitfires

Indian defence SMEs are betting on the new defence procurement policy to boost indigenous manufacturing, but challenges remain.

- Ashish Sinha

Wave of optimism is sweeping home-grown small and medium enterprises (SMEs) associated with the Indian defence sector. The government’s Make in India initiative and particularly its defence offset policy has come as a shot in the arm for a number of SMEs that have gained from the rule requiring global defence suppliers to invest 30 per cent of the equipment deal amount in the Indian market by way of local sourcing. SMEs such as Noida-based Samtel Avionics, Kanpur-based MKU and Bangalore-based SI2 Microsystems, among others, have seen their order books swell as a result.

Now, all eyes are on the much-delayed Defence Procurement Policy 2015 (DPP 2015), which is expected to unleash the next wave of local manufacturing to meet the growing demand of the Indian armed forces.

Take Bangalore-based SI2 Microsystems, for instance. After a subdued couple couple of years owing to the global slowdown, when demand from the local industry kept it going, the company is now betting on DPP 2015 to change its fortunes. “We expect key projects from Hindustan Aeronautics (HAL) for indigenisation of sub-systems for the MIG and Sukoi aircraft and more projects from MBDA Missile Systems (France) in the missile testing area. Our current order book is nearly Rs 30 crore, but we expect healthy growth over the next two years,” says Sanjay Soni, president, SI2 Microsystems. Besides, the Indian Space Research Organisation (ISRO), Defence Research and Development Organisation (DRDO), Bharat Electronics (BEL), HAL and the Indian Air Force, SI2 Microsystems also works for MBDA Missile Systems, ELISRA, Stratasys, Sicon Tech (Israel) and Analog Devices (US), among others.