MSMEs Can Make Or Mar ‘Make In India' Initiative
Geopolitics|February 2021
The fulcrum of the ‘Make in India’ programme is the micro, small and medium enterprises (MSMEs) segment and, as of now, the MSMEs are thought of only as an adjunct. But that is slowly changing, explains R Chandrakanth
R Chandrakanth

How did China become the ‘factory of the world’? It had and has plenty of cheap labour, abundant raw materials, lax environmental rules and focused entrepreneurs to capture markets. And in the late 1970s, it embraced a series of market reforms, despite being a communist state, and that was the beginning of its journey to becoming a manufacturing superpower. It not only established special economic zones with market-friendly rules but also gave a solid platform for the small and medium enterprises (SMEs) which over the years have consolidated their position.

As per research firm Statista, each year about 5 million SMEs get added to the list in China, representing at least a 10 per cent year-over-year growth rate. In 2019, the number of SMEs was estimated to be over 38 million. On the other hand, India has 63.3 million MSMEs. Wait, here is the catch, of the 63.3 million, 99.4 per cent (that is 63 million) are micro-enterprises while 0.52 per cent (3.31 lakh) are small enterprises and 0.007 per cent (5,000) are medium enterprises. Of this number, those in the realm of defence manufacturing is minuscule, one because the defence sector is just opening up for new businesses and two the private sector does not consider defence production as a lucrative business, besides the severe bureaucratic obstacles it has to face. The present dispensation is trying its best to create an eco-system wherein MSMEs will have a major role to play in the ‘Make in India’ initiative.

Pandemic derails MSMEs

Meanwhile, the pandemic has derailed many businesses, particularly MSMEs. An Ernst & Young study said that 40 per cent of the MSMEs in the defence sector may shut down unless the government stepped in with support packages. The study indicated that it may take a year for the MSMEs to get back on their feet.

The report mentioned: “As far as the issue of financial resources for procurement from industry is concerned, it is important to realise a way so that military modernisation doesn’t take a hit. Capital defence budget consists not only of modernisation but also land, construction work, etc. The 20 per cent cap should be enforced on the budget outlay for such segments without hampering military modernisation.”

Slew of measures

Understanding the travails of the MSMEs, the government in September 2020 announced a slew of measures that would prop up the segment. The government has made specific reservations for MSMEs under the ‘Make’ procedure. An innovation ecosystem for defence titled. “Innovations for Defence Excellence’ (IDEX) has been launched, aimed at the creation of an ecosystem to foster innovation and technology developed in aerospace by engaging industries including MSMEs. The government also created a portal named SRIJAN for DPSUs, Ordnance Factory Boards and Services with an industry interface to provide development support to MSMEs/Startups/Industry for import substitution.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM GEOPOLITICSView All

MEETING NEW AIR AND MISSILE THREATS

The Indian Air Force has begun substantial modernisation of its strategic air defences. But while progress has undoubtedly been made, strategic SAM defences remain weak, writes SANJAY BADRI MAHARAJ

10+ mins read
Geopolitics
February 2021

EXPENSIVE BUT INDISPENSABLE AIRPOWER

AMIT GUPTA argues why given the harsh economic challenges facing the country, which is not unique to India, the best way to afford an effective air force is to plan differently but smartly by going for techno-globalisation rather than futile techno-nationalism

10+ mins read
Geopolitics
February 2021

IAF INDIGENISATION REALISTIC TARGETS ARE NEEDED

India cannot and must not expect complete indigenisation. The tendency to view Indian efforts in terms of indigenous content is singularly unhelpful. While increasing indigenization is necessary, economies of scale, costs, and realistic appraisal of the level of technology transfer have to be taken into consideration, argues SANJAY BADRI MAHARAJ

8 mins read
Geopolitics
February 2021

EVERGREEN RUSSIAN FACTOR IN EVOLUTION OF IAF

AMIT COWSHISH argues why it is hard to ignore the Russian factor in India’s military capability

10+ mins read
Geopolitics
February 2021

NANO DRONES: A BIG IMPACT ON THE BATTLEFIELD

Nano drones, the advanced systems that pack a lot of functionality into a tiny form factor, are becoming a major military tool. With China having a huge lead, India needs to get its act together, argues RAKESH KRISHNAN SIMHA

9 mins read
Geopolitics
February 2021

BEING SELF-RELIANT IN DEFENCE

The ‘Atmanirbhar Bharat’ campaign is speeding up the growth of indigenous defence manufacturing capability in India, writes C SANTHOSH

10+ mins read
Geopolitics
February 2021

POST-RAFALE IAF GROWTH CHALLENGES

In order to have its authorized 42 squadrons earliest by 2038, the Indian Air Force requires $110 billion (₹770,000 crore), estimates ANIL CHOPRA. Where is that money? Will this remain a pipe dream?

10+ mins read
Geopolitics
February 2021

AUGMENTING THE AIRLIFT CAPABILITY

India is slowly and steadily raising its means to deploy and sustain military forces across possible distant battlefields by air, writes NINAD D SHETH

10 mins read
Geopolitics
February 2021

MSMEs Can Make Or Mar ‘Make In India' Initiative

The fulcrum of the ‘Make in India’ programme is the micro, small and medium enterprises (MSMEs) segment and, as of now, the MSMEs are thought of only as an adjunct. But that is slowly changing, explains R Chandrakanth

6 mins read
Geopolitics
February 2021

Defence Against Offence: India Is Building Up Its BMD Systems

The experience gained from the development and operation of the BrahMos Mach-3 supersonic cruise missile by the Indian armed forces will be an added advantage not available to other nations in the region. As a result, India could likely have operational hypersonic weapons capability before the end of the decade, explains C Santhosh

9 mins read
Geopolitics
February 2021