CDIIC, IIT Madras Join Forces To Drive Defence Innovation Through MSMEs

CODISSIA Defence Innovation and Atal Incubation Centre (CDIIC), Coimbatore, and the Indian Institute of Technology (IIT), Madras, have signed a Memorandum of Understanding to facilitate MSMEs (Micro, Small, and Medium Enterprises) in undertaking new product development for the defense sector.

The MoU seeks to promote innovation in defense product development through the involvement of MSMEs in the district, a notable industrial hub. According to the terms of the MoU, CDIIC is set to become a manufacturing partner for IIT Madras’ Research & Development wing, collaborating with various DPSUs (Defence Public Sector Undertakings) and PSUs (Public Sector Undertakings).

In the initial phase, CDIIC has identified four products of HAL (Hindustan Aeronautics Limited) designed by IIT Madras for indigenous development through the CDIIC Defence Innovation Hub (CDIIC-DIH). Moreover, the MoU is expected to extend its scope to a student exchange program between CDIIC and IIT Madras, as well as potential startup engagement with industries in Coimbatore.

Government Allocation For FY 2023–24

In a bid to boost MSMEs in the defence sector, the government has allocated INR 1,500 crore for the fiscal year 2023–24. The financial support aims to encourage startups and MSMEs to invest in defence manufacturing, with the funds sourced from the budget earmarked for procurement through domestic private industries (DPI), totaling INR 24,805.76 crore.

India's diverse MSMEs contribute significantly to defence manufacturing, producing a range of equipment from fighter jets to submarines domestically. This initiative is anticipated to drive innovation, create job opportunities, and offer cost-effective solutions. Several MSMEs and startups actively participate in designing and developing defence products under schemes such as Innovation for Defence Excellence (iDEX), Technical Development Fund (TDF), and the Make Project of Defence Acquisition Procedure (DAP) 2020.

USD 5 Billion Defence Export Target

The Central Government's commitment to achieving a USD 26-billion defence industry by 2025 includes an expected investment of USD 10 billion in aerospace and defence goods and services. This ambitious goal is projected to generate employment for 2–3 million individuals. The simplification of defence export procedures has already yielded positive results, with exports reaching INR 10,745 crore in 2018-19, seven times higher than the figures achieved in 2016–17. A target of USD 5 billion for exports has been set by 2024.

Currently, more than 8,000 MSMEs are actively involved in defence production, and efforts are underway to double this figure to 16,000. This expansion is poised to enhance India's export potential, positioning the country as a global player in defence manufacturing. Supporting MSMEs not only ensures a significant portion of defence manufacturing occurs domestically but also enables rapid adaptation to changing requirements and provides cost-efficient alternatives, addressing concerns about cost overruns in the defence sector.