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Start-ups are welcome in Defence Sector: Make II Policy

Expansion of Indian defence manufacturing industry and how Indian government supporting it with best possible manners and resources.

It is estimated that India’s defence sector —which is one of the world’s largest and lucrative markets — requires $130-150 billion for modernisation and restructuring in order to become self-reliant in the coming decade.

The Government has allocated over 2.74 lacs crore* for the development of this sector in the fiscal year 2017 and 2.95 lacs crore in fiscal year 2018*, but how long can we keep importing most of our defence equipment and be content with a sub-developed manufacturing base despite having the skill sets and capabilities?

The answer is very soon as is possible, in this regard even if we recount the words of our “Finance Minister of his budget speech then he had said that, “ever since the NDA Government has assumed office in 2014, lot of emphasis has been given to modernizing and enhancing the operational capability of the Defence Forces. A number of initiatives have taken to develop and nurture intrinsic defence production capability to make the Nation self-reliant for meeting our defence needs. Ensuring adequate budgetary support will be our priority”.

In Support to words of Mr. Jaitely ( “The Finance Minister India” ) We may see that just few days ago of budget speech, our Defence Ministry under supervision of Mrs. Nirmala Sitharaman ( Defence Minister of India) has chaired a meeting with “Defence Acquisition Council” where a decision was taken to simplify the “Make II” category of defence procurement procedure ( DPP-2016 ).

This decision has taken for boosting the “Make in India” initiative with an additional objective of creating an indigenous defence-manufacturing sector to encourage local manufacturing in defence equipment and to reduce import of such products.

Earlier there is “Make – I policy” which was difficult with regards to its norms hence a simplified policy is made by removing those hassling norms named “Make – II Policy”.

The new policy allows even start-ups to participate in defence equipment manufacturing either at any mode of start-up they are operating –  ( i ) Mere idea or Interest in manufacturing such components or (ii) Start-ups which have made a component and ready for testing.

The minister has said that earlier if; the defence ministry were asking the industry what they might do for the sector. If there were 100 firms, only one or two companies were coming forward. “But now if a small company is making an equipment, they can approach through the Make II policy,”.

Even those companies, which do not engage in manufacturing of defence equipment but has interest to produce them, can also approach the ministry.

If a small company has an idea and has the ability to produce a particular (defence) component, request for proposal can be issued after completing the test trials,”.

The intent of our government crystal clearly that they are ready for making an indigenous defence industry at a very fast pace and for this they will facilitate the private firms participation very soon.

From this it can be analysed very well that before our manufacturing industry reach the range of “Trillion digits, it would receive one more sector to add in its growth i.e. the local defence manufacturing industry.

As per data, The Indian defence equipment market is in between of $130-150 billions to make India at par with other defence equipment giants.

This is a more than just bigger opportunity where the private firms will boom and stay like anything, but it totally again depends upon the level of agreements that shall be framed between the government and private players.

The defence ministry has even made the application norms are at 50% of the level at which they were earlier. Previously it could take two to five years to finalise from the date of in-principle approval to the issue of final order. Under Make II policy, depending on complexity, it can be one year or maximum of two years.

Categories: Corporate Law
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