A Small and Medium Enterprise (SME) facility in Coimbatore supplies products to one of the defence research organisations since the 1970s. Its been a long and arduous journey as the task of re-engineering, developing, and supplying the product took time, continuous effort, and investment.
“ We started it (supplying to the organisation) in 1973. We got the order as India was importing the product then and indigenisation brought down the costs tremendously. But, we faced a lot of hurdles. Some raw materials were not available in India. We had to import it and no one was willing to even give quotes. Our facility was very small then. Yet, we had skilled workers who could do the required job,” says the entrepreneur who operates the facility.
The company now makes almost 90 % of the components for the product in-house and has expanded its supply to the defence.
“For one of the products that we supply, it took three years to get approval. We need patience and resources to develop, get approvals, and start supplying the product,” the entrepreneur adds.
The engineering hub of Coimbatore has 30 to 40 such SMEs that supply to the defence sector. Many of these have, over the years, only widened the basket of products that they supply to the sector.
In the recent years, nearly half a dozen large companies in Coimbatore have also started manufacturing for the defence. Further, the State Government plans to develop an aero defence park on 500 acres at Sulur, the Coimbatore District Small Industries Association (CODISSIA) is all set to establish defence innovation and incubation facilities here with the support of the Central Government, and Coimbatore is part of the Defence Corridor project.
Despite the challenges involved in manufacturing and supplying for the defence, Coimbatore has the capacity to make any component for the sector, say industry owners here.
The CODISSIA has short-listed 50 products that will be developed and supplied by MSMEs here for the defence sector by its Defence Innovation Hub. “Only the big companies can invest in research and development. The smaller ones will not be able to do so. The CODISSIA had two projects - an innovation hub and an incubation facility. Infrastructure has to be developed for the incubation.
The association has submitted detailed projects reports to the government for both. The hub will partner with SMEs that can produce the identified products. It will develop the products, and give the units the draft plan, the standard operating procedure, etc.,” says R. Ramamurthy, president of CODISSIA.
The hub is expected to take off shortly and will be established properly by December. “Almost all the SMEs have spare capacities. If a specific product is developed and given to them, they will be able to manufacture it,” he says.
“This is a tough sector. But, the innovation hub will be a model when we implement it,” he adds.
Further, investments by the large-scale companies in the defence sector and the innovation hub are expected to develop a strong supply chain here for the defence sector.
Several MSMEs will become vendors. Some of the components are general and can be sourced from the MSMEs. Some need to be developed specifically. When a job is outsourced, the cost will come down.
Coimbatore District Lead Bank manager S. Venkataraman says the defence corridor is a new project. “It is still in a primitive stage. So the banks have not yet gone into large-scale funding the sector here.
Financial support
However, when it develops, there will be a boom for industries, the city, and the banking sector.” Industries that invest in it will need financial support.
Any business that is approved by the government will be able to get bank loan.
Banks can extend credit based on performance or financial guarantee too.
So, funding the defence sector projects will not be a problem, he says.
An official of the District Industries Centre says it had received one proposal for single window clearance and it was for the defence. As the industry grows, testing facilities should also be developed.
Coimbatore has taken its first steps in the defence area. But it has a long way to go.