SME Digital World

Author: SDW Editorial Desk

India Inc. Bets Big on AI to Transform its Manufacturing Sector

India Inc. Bets Big on AI to Transform its Manufacturing Sector

Artificial Intelligence is revolutionizing operational landscapes through automation, enhancing efficiency in smart factories and customer solutions. India stands on the brink of its second major business transformation in three decades, poised to become a hub for AI-powered manufacturing, similar to its dominance in the IT services boom of the 1990s.
A Strong Foundation for AI
India already possesses many prerequisites necessary to become an AI powerhouse. With extensive computing and analytical infrastructure, India is well-equipped for a seamless transition from big data analytics to machine learning and AI systems. The country also has a unique opportunity to leverage its IT talent, cost advantages, and growing manufacturing base to become a global leader in AI-powered manufacturing. By addressing key challenges and implementing strategic initiatives, India can attract investments, foster innovation, and unlock immense economic potential.
Economic Impact and Growth Projections
AI is expected to contribute up to $500 billion to India’s GDP by 2025 and $967 billion by 2035. In the manufacturing sector, market studies indicate that the market size of manufacturing AI in India is projected to exceed INR 12.5 billion by 2028, with a remarkable CAGR of 58.96% from 2023 onwards. The Global AI Index ranks India fifth among 62 countries, highlighting its transformative potential in AI. Despite challenges, India’s young and talented workforce, with half of its population under 30, provides a solid foundation, particularly with an abundance of high-quality AI-trained engineers.
Adoption and Investment
According to the Generative AI Radar 2024 report by Infosys, India, like many of its Asia-Pacific neighbors, is leading in AI adoption and development. India is set for a significant increase in AI investments, with a forecasted 165% jump in spending on general AI by Indian companies, reaching USD 386 billion. The NASSCOM AI Adoption Index positions India as an “Enthusiast” with an AI maturity index of 2.45 out of 4. NASSCOM’s report highlights that 78% of India’s manufacturing companies have a well-defined AI strategy, and 67% are already testing AI POCs or limited use cases.
Opportunities and Benefits
AI is increasingly used across various industries in India, from banking and healthcare to farming and manufacturing, to improve efficiency. In the manufacturing sector, AI drives automation and predictive maintenance, with smart factories employing AI-enabled robots and sensors to optimize production processes, reduce downtime, and enhance product quality. AI also plays a crucial role in customer service with automated conversational AI voice bots, supply chain management, and operational efficiency. Customer segmentation benefits from AI as well, allowing companies to understand and target the right audience effectively.
Key Enablers and Challenges
While the potential benefits of AI in India are immense, challenges accompany its widespread adoption. Ethical and societal impacts of AI technologies, such as data privacy concerns, necessitate responsible AI development and deployment. The rapid pace of technological advancement raises questions about regulatory frameworks and workforce readiness. Policymakers are collaborating with industry stakeholders across India to establish robust governance mechanisms that balance innovation with ethical considerations. Additionally, India is investing in education and upskilling initiatives to prepare its workforce for AI jobs.
The Road Ahead
Technology has always been a catalyst for positive change. In India, AI is driving economic prosperity, social well-being, and sustainable development in the manufacturing sector with far-reaching effects. For a country that has already experienced a technology boom in recent decades, it is crucial to harness the power of AI responsibly and ethically. A favorable geopolitical climate is encouraging global manufacturers to set up operations in India. Embracing AI can be a game-changer, propelling India’s manufacturing sector to global leadership.

June 26, 2024
GST Relief: Exemptions for Hostel Rents and Railway Services

GST Relief: Exemptions for Hostel Rents and Railway Services

The GST Council, in its 53rd meeting, announced several relief measures aimed at benefiting the middle class. Among these is an exemption from GST for rents up to ₹20,000 per month for accommodations outside college campuses. This applies to students and working professionals for stays up to 90 days, a reduction from the previous 12% GST rate on such accommodations.
Key Exemptions and Reductions
Union Finance Minister Nirmala Sitharaman highlighted that the council also exempted services like platform tickets, waiting room access, and cloakroom facilities at railway stations from GST. Furthermore, the council reduced GST on cartons to support apple farmers in Himachal Pradesh and Jammu and Kashmir, and set a 12% GST rate for all milk cans and solar cookers.
Addressing MSME and Industry Needs
The council recommended waiving interest and penalties for demand notices issued under Section 73 of the GST Act for cases not involving fraud, suppression, or misstatements. This waiver applies to notices from fiscal years 2017-18, 2018-19, and 2019-20.
Pending Issues and Future Considerations
Contentious issues like GST on fuel products, online gaming, and insurance premium rate rationalization were not discussed in this meeting. Finance Minister Sitharaman mentioned that the inclusion of petrol and diesel under GST depends on state decisions, despite the central government’s intention to include them.
Regarding the demand for GST exemption on fertilizers, Revenue Secretary Sanjay Malhotra stated that this issue has been referred to the Group of Ministers (GoM) due to its significance. Additionally, the council deferred the discussion on co-insurance premiums to the next meeting.
Industry Response and Additional Measures
Saurabh Agarwal, Tax Partner at EY India, commended the government’s measures, such as waiving interest and penalties for disputes up to FY 2019-20, extending ITC claim timelines for FY 2020-21, and reducing pre-deposit requirements for appeals. He suggested that streamlining the GST rate structure and exploring an ‘invoice locking’ facility within the GSTN system would further reduce litigation.
Support for Railways and Appeal Process
The council recommended exempting various services provided by Indian Railways to the public, such as platform tickets and waiting room facilities. This exemption will be regularized from October 20, 2023, to the date of the exemption notification.
To ease cash flow and working capital constraints for taxpayers, the council also proposed reducing pre-deposit amounts for filing appeals. The maximum pre-deposit for appeals with the appellate authority has been reduced to ₹20 crores for both CGST and SGST, down from ₹25 crores. For appeals with the Appellate Tribunal, the pre-deposit has been reduced to 10% with a maximum of ₹20 crores for both CGST and SGST, down from 20% with a maximum of ₹50 crores.

June 24, 2024
Government Considering New Bank to Bridge Credit Gap for MSMEs

Government Considering New Bank to Bridge Credit Gap for MSMEs

The government is contemplating the establishment of a dedicated bank to provide direct lending to micro, small, and medium enterprises (MSMEs). This initiative aims to enhance credit flow to the under-served sector, thereby boosting economic activity and job creation.
Current Scenario and Challenges
Presently, the Small Industries Development Bank of India (SIDBI) primarily provides refinancing to banks that lend to MSMEs, which helps reduce financing costs for these units. Additionally, state financial corporations and state industrial development corporations lend directly to MSMEs.
Despite these efforts, MSME credit penetration in India remains at 14%, significantly lower than 50% in the US and 37% in China, according to an EY report. The Indian MSME sector faces a credit gap of Rs 25 trillion, indicating a vast untapped market.
Proposal Details
“There is a need to set up a separate bank for the MSME sector to address direct credit shortages,” an official said, noting that the proposal is under consideration. The government is expected to decide on this proposal at an appropriate time. The bank’s ownership structure might include a hybrid public-private partnership model.
Financial Context
Adequate, timely, and low-cost finance is crucial for MSMEs’ growth into larger enterprises. As of December 2023, outstanding credit to MSMEs by scheduled commercial banks had grown by 20.9% annually, reaching Rs 26 trillion.
Significance of MSMEs
MSMEs, numbering 64 million, are vital to the Indian economy. They provide over 110 million jobs, accounting for 23% of the labor force, making them the second-largest employer after agriculture. MSMEs contribute 27% to India’s GDP, 38.4% to the total manufacturing output, and 45% to the country’s total exports.
Industry Insights
“A separate bank that understands the needs and workings of MSMEs is required,” said Sandip Kishore Jain, President of the Federation of Indian Micro and Small & Medium Enterprises. He emphasized that large banks often do not grasp the unique requirements of MSMEs. In some European countries, MSMEs are grouped with home loan customers due to their small borrower status.
Vijay G Kalantri, President of the All India Association of Industries, suggested converting SIDBI into a full-fledged bank for direct MSME lending if establishing a new bank is not feasible. He also advocated for MSMEs to receive loans at housing interest rates, i.e., 6% for exports and 8% for domestic production, compared to the current rates of 11-13% for MSMEs and 8-9% for exports.
SIDBI Overview
Established under an Act of Parliament in 1990, SIDBI’s majority shareholders include the Government of India (20.85%), State Bank of India (15.65%), Life Insurance Corporation of India (13.33%), and the National Bank for Agriculture and Rural Development (9.36%).
SIDBI benefits from low-cost funds available from banks against their shortfalls in meeting priority sector lending (PSL) targets. For FY24, the MSE Refinance allocation was Rs 84,000 crore. However, SIDBI’s growth prospects are tied to the PSL target coverage achieved by scheduled commercial banks. As these banks progressively meet higher PSL targets, the overall allocation under MSE funds could decrease, affecting SIDBI’s long-term growth prospects, according to an ICRA report.

June 24, 2024
India’s Electronic Manufacturing May Reach USD 500 Billion by 2030: CII Report

India’s Electronic Manufacturing May Reach USD 500 Billion by 2030: CII Report

A report by the Confederation of Indian Industry (CII) emphasizes the need for critical actions to transform India’s electronic sector ecosystem from “import-dependent assembly-led manufacturing” to “component-level value-added manufacturing.”
Key Findings
According to the report, in 2023, the demand for components and sub-assemblies reached USD 45.5 billion, supporting USD 102 billion worth of electronics production. This demand is projected to surge to USD 240 billion, supporting USD 500 billion worth of electronics production by 2030.
Growth Projections
Priority components and sub-assemblies, including Printed Circuit Board Assemblies (PCBAs), are expected to grow at a robust Compounded Annual Growth Rate (CAGR) of 30%, reaching USD 139 billion by 2030.
Recommendations for Government Action
The report recommends several key actions for the government, including:
– Introducing a fiscal support scheme, SPECS 2.0 (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors).
– Rationalizing import tariffs on components like camera modules.
– Signing Free Trade Agreements (FTAs) with European and African countries.
Priority Components
The report identifies five priority components and sub-assemblies as high priority for India: lithium-ion batteries, camera modules, mechanicals, displays, and PCBs. These components accounted for 43% of the components demand in 2022 and are expected to grow to USD 51.6 billion by 2030.
Current Challenges
These components are either minimally produced in India or are heavily import-dependent. Sustaining this trend of importing priority components is not viable. The PCBA segment, which relies heavily on imports, is expected to grow by 30%, creating a demand of around USD 87.46 billion by 2030.
However, India faces several challenges, including:
– Manufacturing cost disadvantages compared to economies like China, Vietnam, and Mexico (10-20%).
– Lack of large domestic manufacturing corporations.
– Absence of a domestic design ecosystem for Indian companies.
– Insufficient raw materials ecosystem.
Economic Benefits
The report suggests that policy support will yield various economic benefits, such as:
– Job creation for approximately 280,000 people by 2026.
– Increase in domestic value addition from current levels.
– Reduction in import dependency.
– Increase in GDP.
These measures will help firmly position India as a global hub for electronics manufacturing by 2030.

June 24, 2024
India-EU Trade Council Hosts EV Battery Recycling Startup Event

India-EU Trade Council Hosts EV Battery Recycling Startup Event

The India-European Union Trade and Technology Council (TTC) Working Group 2 organized a startup matchmaking event on June 20, 2024, featuring twelve high-impact solution providers in EV Battery Recycling Technologies. This event offered startups and SMEs an exclusive platform to pitch their innovative technologies, spanning the entire battery recycling value chain, from collection to valuable mineral extraction.
Participating Startups
The event featured twelve startups selected through a rigorous process based on scientific merit, market readiness, and cooperation prospects. The selected Indian startups included Lohum, LW3 Pvt Ltd., BatX Energies, Evergreen Lithium Recycling Pvt Ltd., Metastable Materials Pvt Ltd., and CENALL Waste Management LLP. The EU startups were Alterity, Ecomet Refining, Eneris, Primobius, RockTech, and Tozero.
Opening Remarks and Key Interventions
The matchmaking event began with opening remarks from H.E. Mr. Saurabh Kumar, Ambassador of India to Belgium, Luxembourg, and the EU, and H.E. Mr. Herve Delphin, Ambassador, Delegation of the European Union to India. They emphasized the importance of fostering innovation and cooperation in green technologies, particularly in the rapidly growing EV sector.
Key interventions were provided by Professor Ajay Kumar Sood, Principal Scientific Adviser to the Government of India, and Mr. Marc Lemaitre, Director-General for Research and Innovation at the European Commission.
Professor Ajay Kumar Sood highlighted the benefits of the exchange trip for selected startups, stating, “This matchmaking event today brings together the best talents and technologies in the battery recycling space on both sides, giving them an exclusive platform for exchange, networking, and prospective investments.”
Mr. Marc Lemaitre emphasized the significance of innovation in the EU-India partnership, noting, “Every step towards advanced battery recycling is a significant carbon win for our environment. This matchmaking event is such a step by bringing together innovative startups from both regions that want to scale up green solutions under the umbrella of the EU-India Trade and Technology Council.”
Additional Attendees
The event was also attended by Dr. Parvinder Maini, Scientific Secretary, Office of PSA, Mr. Sukumar Mishra, Director, IIT (ISM) Dhanbad, and Mr. Karthick Athmanathan, Honorary PSA Fellow.
Next Steps
As a follow-up, three startups from India and three from the EU will be awarded a week-long market immersion experience in the respective regions. During this visit, the selected companies will engage with interested stakeholders, explore potential collaborations, and gain insights into the local market landscape. This initiative presents opportunities for establishing pilot projects, commercial ventures, and co-development initiatives, fostering a robust innovation ecosystem in EV battery recycling.

June 21, 2024
Karnataka Aiming for 15-16% Industrial Growth: Chief Minister Siddaramaiah

Karnataka Aiming for 15-16% Industrial Growth: Chief Minister Siddaramaiah

BENGALURU: Chief Minister Siddaramaiah announced on Wednesday that Karnataka is targeting an industrial growth rate of 15-16% annually. He highlighted the state’s proactive approach to policymaking and its industrial policy, which offers best-in-class incentives to attract global investors.
Key Points from the Global Investors Meet 2025 Curtain Raiser
– Global Investment Destination: Karnataka has positioned itself as a premier destination for global investments, being the second-highest recipient of FDI inflows in India, with 22% of the nation’s total FDI over the last five years.
– Growth Targets: The CM stated that the state has experienced a 9.3% growth rate in industries over the past decade and aims to achieve a $1-trillion GDP by 2032.
– Global Investors Meet 2025: Scheduled for February 12-14 at Bangalore Palace, this event will see over 5,000 senior delegates and 100+ speakers. The theme, ‘Reimagining Growth,’ will include 30+ technical and cultural sessions on topics such as AI, Industry 5.0, Web 3.0 & Blockchain, Smart Computing, and Cybersecurity.
Initiatives and Highlights
– SME Connect ’25: Launched by Large and Medium Industries Minister MB Patil, this platform aims to expand business opportunities for SMEs. Gunjan Krishna, Commissioner for Industrial Development, emphasized the importance of SMEs, which provide 41% of employment.
– VentuRISE – Global Startup Challenge: This second edition aims to recognize and support startups in sectors like Electronic System Design and Manufacturing (ESDM), Clean Mobility, and Aerospace & Defence.
R&D and Innovation Leadership
– Global R&D Contribution: IT-BT Minister Priyank Kharge noted that Karnataka contributes 22% to global R&D and leads in exports, FDI, and technology services.
– Educational and Innovation Hub: With over 250 colleges, 44 universities, and 25,000 startups, Karnataka is a capital of R&D and innovation. The state’s commitment to industry-friendly policies and continuous investment in science, technology, and education drives sustainable growth and better standards of living.
Industry Insights
– Collaboration and Innovation: Ramesh Ramadurai, Past Chairman of CII Karnataka & MD of 3M India, emphasized the importance of augmenting resources, understanding customer needs, and developing valuable solutions. Building infrastructure and fostering partnerships are key to transitioning to groundbreaking new products.
Chief Minister Siddaramaiah’s announcements and the initiatives discussed at the Global Investors Meet 2025 highlight Karnataka’s ambitious plans for significant industrial growth and its strategy to attract global investments and foster innovation.

June 20, 2024
Economists Emphasize Employment Generation and Manufacturing Boost in Upcoming Budget

Economists Emphasize Employment Generation and Manufacturing Boost in Upcoming Budget

During a pre-Budget consultation with Finance Minister Nirmala Sitharaman, economists stressed the importance of focusing the upcoming Budget on employment generation and strengthening the manufacturing sector. Highlighting concerns over unemployment, they urged the government to prioritize job creation. There was a consensus that with the economy showing resilience, stimulating consumption demand would not be a significant challenge.
Economists participating in the consultation, including National Co-convenor of Swadeshi Jagran Manch Ashwani Mahajan, Director and Chief Executive of the Institute for Studies in Industrial Development (ISID) Nagesh Kumar, and TCA Anant, emphasized these priorities.

Key Points from the Consultation

– Employment Generation: Economists highlighted unemployment as a major issue and recommended the government focus on creating jobs.
– Manufacturing Sector: Emphasis was placed on promoting the manufacturing sector, with a particular focus on MSMEs and the textile industry. Nagesh Kumar suggested expanding the scope of the Production Linked Incentive (PLI) scheme.

Statements from Participants

After the meeting, Ashwani Mahajan mentioned that “unemployment is a big issue, and the government should focus on generating jobs.” He added that given the economy’s resilience, consumption demand would not pose a problem.
Nagesh Kumar noted the need to push the manufacturing sector and called for incentives to support MSMEs and the textile sector. He also recommended expanding the PLI scheme to further promote manufacturing.

Official Statement

The Ministry of Finance posted on X (formerly Twitter) about the meeting: “Union Minister for Finance & Corporate Affairs Smt. @nsitharaman chairs the first Pre-Budget Consultations with leading economists in connection with the forthcoming General Budget 2024-25 in New Delhi, today.” The post also mentioned the attendance of Union Minister of State for Finance Shri @mppchaudhary, Finance Secretary, and other key officials.

Upcoming Budget Presentation

Finance Minister Nirmala Sitharaman is expected to present the Union Budget for the 2024-25 fiscal year in the last week of July.

June 20, 2024
Study Outlines Path for India to Achieve $5 Billion Defence Export Goal

Study Outlines Path for India to Achieve $5 Billion Defence Export Goal

A recent study by Nexgen Exhibitions underscores the critical steps India must take to reach its USD 5 billion defense export goal by 2024-25. The key strategies include streamlining foreign direct investment (FDI), enhancing Research & Development (R&D), and boosting manufacturing capabilities. This comprehensive study involved over 130 national and international manufacturers of arms, ammunition, and security equipment.
Key Insights from the Study
Streamlining FDI and Enhancing R&D and Manufacturing
Conducted across 15 cities in India, the study emphasizes the need for streamlined FDI inflows and elevated technology integration, including AI and other advanced technologies. A robust skill development ecosystem is also essential to create a pool of industry-ready professionals, enhancing India’s manufacturing capabilities.
India’s Emergence as a Global Manufacturing Hub
By bolstering R&D and manufacturing, India’s homeland security and defense sectors are poised to become global manufacturing hubs. The study points out the importance of increasing procurement categories to boost domestic defense manufacturing. Currently, India exports defense equipment to over 75 countries, demonstrating its expanding influence in the global defense market.
Advanced Technologies and Disaster Management
The homeland security sector is crucial for maintaining internal stability and protecting national interests. Integrating advanced technologies and data analytics is essential for effective threat detection, surveillance, and response. AI and machine learning can significantly improve risk prediction and mitigation. Additionally, a robust disaster management mechanism ensures preparedness and swift response to emergencies, enhancing public safety and national resilience.
International Police Expo 2024
The International Police Expo, set for July 4-5, 2024, in New Delhi, will bring together global and domestic manufacturers, suppliers, and innovators. With participants from over 25 countries, including the UK, USA, Israel, and Germany, the expo will showcase the latest innovations and technologies. This event provides a platform for international collaboration and the exchange of best practices, shaping the future of policing and homeland security.
A spokesperson for Nexgen Exhibitions remarked, “The International Police Expo facilitates connections between global and domestic manufacturers, suppliers, and innovators, fostering discussions on the key priorities shaping the future of policing and homeland security.”
Conclusion
The study concludes that India’s path to achieving its USD 5 billion defense export goal by 2024-25 hinges on streamlined FDI, enhanced R&D, and manufacturing capabilities. Government support through policies and incentives, coupled with strategic partnerships and technological advancements, is crucial for positioning India as a global defense manufacturing hub.

June 19, 2024
AI Revolutionizing Education: How India is Embracing the Future
AI Revolutionizing Education: How India is Embracing the Future
Artificial Intelligence (AI) is rapidly transforming various sectors, and education is no exception. We may be prone to look at AI in the education space negatively with every student depending on it for their essays and tests, but students leaning on AI may very well be inevitable. Further, teachers and students and embrace AI and evolve along with it In India, there’s a growing interest in leveraging AI to enhance learning experiences and address existing challenges in the education system. Here’s a closer look at this exciting development:
Potential Benefits of AI in Education:
Personalized Learning: AI can personalize learning paths for students by analyzing their strengths, weaknesses, and learning styles. This allows for a more tailored approach to education, ensuring students are challenged appropriately and can progress at their own pace.
Adaptive Learning Tools: AI-powered platforms can adapt to a student’s performance in real-time, adjusting the difficulty level of exercises or recommending additional resources based on their needs.
Intelligent Tutoring Systems: AI tutors can provide students with individualized feedback and support, filling the gap in situations where teacher-to-student ratios may be high.
Automated Grading and Feedback: AI can automate routine tasks like grading multiple-choice questions, freeing up teachers’ time to focus on more complex aspects of teaching like providing personalized feedback and guidance.
Language Learning Assistance: AI-powered tools can help students learn new languages through interactive exercises, personalized vocabulary recommendations, and real-time pronunciation feedback.
Content Creation and Accessibility: AI can assist in creating engaging and interactive learning materials like simulations, games, and personalized study guides. It can also translate educational content into different languages, making education more accessible to a wider audience.
Current initiatives in India:
The government has launched an initiative to promote the use of AI in Indian educational institutions. This could involve providing funding for AI-based educational technologies, training teachers on how to integrate AI tools into their classrooms, and developing frameworks for the ethical use of AI in education.
Several Indian startups are developing innovative AI-powered educational solutions. These solutions cater to various needs, such as personalized learning platforms, adaptive learning tools, and intelligent tutoring systems.
Universities and research institutions are exploring the potential of AI in education through research projects and pilot programs.
Challenges and Considerations:
Equity and Access: Ensuring equitable access to AI-powered educational tools for students from all backgrounds is crucial. The digital divide in India needs to be addressed to prevent AI from exacerbating educational inequalities.
Teacher Training and Support: Teachers need proper training and support to effectively integrate AI tools into their teaching practices. It’s important to avoid replacing teachers with AI but rather empower them to utilize AI as a valuable teaching aid.
Data Privacy and Security: Protecting student data privacy is paramount when using AI in education. Robust data security measures need to be implemented to ensure student data is safe and used ethically.
The Road Ahead:
The use of AI in Indian education is still in its early stages, but it holds immense promise for the future. By addressing the challenges and ensuring responsible implementation, AI can play a transformative role in making Indian education more personalized, effective, and accessible to all.
June 19, 2024
Bolstering the Aerospace Sector: The Vital Role of MSMEs and the Need for Government Support

Bolstering the Aerospace Sector: The Vital Role of MSMEs and the Need for Government Support

The Indian aerospace and defense market is projected to soar to USD 54.4 billion by 2033, a significant leap from its valuation of USD 27.1 billion in 2024, growing at a CAGR of 6.99% during the forecast period. This rapid growth, highlighted by Custom Market Insights, underscores the sector’s dynamic expansion fueled by increasing manufacturing demands from both domestic and international aircraft carriers. This surge necessitates advancements in innovation and technology for the design, development, and production of critical components and systems, including aircraft engines.
To meet this burgeoning demand, top industry players like Hindustan Aeronautics Limited (HAL), Tata Advanced Systems Limited (TASL), and L&T Aerospace must collaborate with smaller, technologically adept players. Here, Micro, Small, and Medium Enterprises (MSMEs) become indispensable. Known as the backbone of the Indian economy, MSMEs foster innovation, generate employment, and promote equitable development. Their agility and expertise in producing a wide range of aerospace components make them vital to the supply chain, ensuring timely delivery to manufacturers and distributors, unlike larger organizations burdened by bureaucratic processes.
Recognizing the importance of a robust supply chain, the Indian government is pushing for “Make in India,” particularly in the Aerospace and Defense (A&D) sector. Samir V. Kamat, Secretary of the Department of Defence R&D and Chairman of DRDO, emphasized the government’s aim to increase indigenous content in the defense and aerospace sector to over 70% in the next 3-4 years, highlighting the critical role of MSMEs in this endeavor. This push was echoed by Prime Minister Narendra Modi during the 2015 Aero India Air Show, reinforcing the theme of ‘Make in India’.
Government initiatives like the Defence Offset Policy encourage the development of synergistic sectors such as civil aerospace and internal security, providing special incentives for MSMEs. Regular interactions with vendors and stakeholders help address concerns, fostering a collaborative environment.
While reduced imports and record-high defense exports in A&D are promising, further improvements are needed for India to compete globally. Service or product-linked incentives could foster collaboration between large companies and MSMEs. Simplifying regulations for cross-border transactions with global supply chains and striving for self-reliance in the aerospace industry are crucial steps. Additionally, a clear Aerospace Policy, an independent nodal agency for collaboration, and increased government spending focused on small startups, MSMEs, and academia are necessary to fuel research and development for sustainable growth.
The future of the Indian aerospace sector hinges on the symbiotic relationship between big companies, MSMEs, and the government. By introducing industry-friendly schemes, addressing regulatory challenges, incentivizing partnerships, and promoting large-scale manufacturing, India can emerge as a global aerospace hub, competing with world leaders.

June 18, 2024