Defence Ministry Announces INR 499 Cr Support For Startups, MSMEs

The Defence Ministry on Sunday announced budgetary support of INR 498.8 crore for research and innovation in the defence sector involving small businesses and startups.

“Defence Minister Rajnath Singh has approved the budgetary support of INR 498.8 crore to Innovations for Defence Excellence (iDEX)-Defence Innovation Organisation (DIO) for the next five years,” the ministry said in a statement.

The scheme intends to financially support close to 300 MSMEs (micro, small and medium enterprises), startups, individual innovations, and 20 partner incubators under the DIO framework for the next five years to boost self-reliance and indigenisation in the defence and aerospace sector of the country. 

“The scheme aims to facilitate rapid development of new, indigenised and innovative technologies for the Indian defence and aerospace sector to meet their needs in shorter timelines; create a culture of engagement with innovative startups to encourage co-creation for defence and aerospace; empower a culture of technology co-creation and co-innovation within the defence and aerospace sector and boost innovation among the startups and encourage them to be a part of the ecosystem,” the ministry said.

The budgetary support would look at engaging MSMEs, startups, individual innovators, R&D institutes through grants or funding, and other support to carry out R&D development that has good potential for future adoption for Indian defence and aerospace needs.

The Department of Defence Production (DDP) will release funds to DIO for “setting up and managing the iDEX network in the form of partner incubators, for communicating with innovators, startups, technology centres of MSMEs through such incubators including those under Department of Science and Technology regarding defence and aerospace needs.” 

DDP will also organise different challenges and hackathons to shortlist potential technologies and entities and evaluate technologies and products developed by innovators, and startups in terms of their utility and impact on the defence and aerospace setup.Other activities under the programme would include interfacing with the armed forces top brass about key innovative technologies and encouraging their adoption into the defence establishment with suitable assistance. It will also include indigenisation, and integration in manufacturing facilities for successfully piloted technologies and organising outreach activities across India.

In 2018, the government announced the Innovations for Defence Excellence (iDEX) scheme during the DefExpo, with the vision to build an ecosystem of innovation and entrepreneurship in India for the defence sector. In 2019, it was reported that the Indian government was considering funding more than 250 startups over the next five years to achieve approximately 50 ‘tangible innovations’ for the Indian defence sector. 

The procurement of defence-related goods and services by the government from micro and small enterprises (MSEs) had increased, though marginally, by 2.2% to INR 9,293 Cr in FY21 from INR 9,090 Cr in FY20 after declining from INR 12,112 Cr in FY19. According to a statement by the Ministry of Defence in September 2020, around 11,000 MSMEs were already engaged as vendors in supplying defence-related goods to Ordnance Factory Board and defence PSUs.

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