Industry lobby to promote defence, homeland security clusters

NEW DELHI - With India’s first Defence Production Policy (DPP) explicitly favouring the growth of small and medium enterprises (SMEs) in the security-related sector, a leading industry lobby will launch initiatives for creating SMEs clusters in the defence and homeland security sector to take the process forward.

The Delhi-headquartered PHD Chamber said the SMEs were the “aam admi” (common man) of the defence industry in India and are critical and essential to developing an indigenous industrial base in the defence and homeland security sectors.

“PHD Chamber will launch initiatives to create Indias first-ever defence and homeland security clusters for SMEs in states across India. These defence and homeland security clusters are to be designated areas in each state which are to locate SMEs pursuing the burgeoning defence and homeland security sectors,” a press release said here Thursday.

Noting that the chamber strongly supported the new DPP and especially the explicit acknowledgement of SMEs in the security sector, PHD Chamber president Salil Bhandari said: “Defence SMEs are the grassroots or the aam-aadmi of the defence industry, and are deemed as critical and essential to the sustainable development of an indigenous defence industrial base.”

Citing the automotive and information technology sectors as proven examples of SME-led accelerated and sustainable growth in India, Bhandari said any policy preference for SMEs in the defence sphere extended by the government could only help the growth of the defence and homeland security industry due to the application of dual-use technologies.

PHD Chamber will enhance its work with the central and state governments to establish defined defence technology-led SME clusters to encourage co-location of SMEs working in the sector. With intended preference in allotments and highlighting designated areas as defence and homeland security clusters, the chamber intends to catalyze synergies between companies for advance research and development, manufacturing and systems integration,” the release said.

PHD Chamber will also work with various public sector undertakings and public and private research organisations to establish a presence and create synergies in these clusters, Bhandari said.

With the defence ministry aiming at achieving 70 percent indigenisation and 30 percent imports in defence acquisitions, the accelerated growth of the domestic industry was essential to meet the requirements of the armed forces and the paramilitary, the release said.

Further, with over $10 billion (Rs.450 billion) likely to accrue as defence offsets over the next few years, there was an enormous opportunity for SMEs to be the primary catalyst for growth in the sector, especially if they collaborate with government defence organisations, the release added.

Overall, India is expected to spend $100 billion over the next decade for defence and security related acquisitions and that would provide the country with nearly $30 billion as offsets, under which the global firms obtaining contract worth over Rs.3 billion have to plough back 30 percent of the deal amount in the domestic industry.

The defence ministry, which introduced offsets clause in global armed forces tenders in 2006 to energise the domestic defence sector, had last month also expanded the scope to the civil aviation, internal security and related training sectors.

Defence Minister A.K. Antony had earlier this month indicated that his ministry was considering proposals for further expansion of the defence offsets implementation in new sectors.

The PHD Chamber serves Chandigarh, Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Madhya Pradesh, Punjab, Rajasthan, Uttarakhand and Uttar Pradesh.