India's Defence budget for 2022-23 was $70.6 Bn. Why CAs should explore defence and space sectors.
The Indian defence sector is booming, and with that plenty of jobs for CAs in the Defence Sector has emerged. The Defence Ministry is betting on Indian entrepreneurs to deliver the equipment.
- India's defence sector has become an attractive investment opportunity due to the government's push for localisation.
- Hi, I am Pankaj Dara and have been a Practicing Chartered Accountant for over 21 years.
- Given that the Indian defence startup ecosystem is booming, CAs need to look into this untapped sector where they can hugely contribute.
Opportunity for entrepreneurs to contribute to the Indian Defence Sector
I started my Chartered Accountancy practice 21 years ago. And for the last two to three years, I have been thinking about what the Indian government should do to support defence startups.
India's defence budget for 2022-23 is Rs 5.25 lakh crore ($70.6 billion), which is almost 2.6% of India’s GDP.
This is a massive amount of expenditure and around 60-62% of India's military equipment is currently imported.
In fact, as per the 2021 data, India accounted for 17.2 percent of global arms imports. But does it have to be that way?
If we are to become the third largest economy by 2030, entrepreneurs have to enter into untapped sectors - like defence and security. These are some of the most lucrative and promising industries out there.
With the current state of the world, the government is now depending on the talent and capabilities of Indian entrepreneurs. Indian Prime Minister Narendra Modi has envisioned that we should give entrepreneurs a chance to build good equipment in the defence space.
Earlier, the government used to develop various infrastructures for the public, such as banks, airlines, railways, etc. But now, we need to focus on developing our own defence capabilities if we want to be a truly self-reliant nation.
The government believes that providing a proper startup ecosystem to young entrepreneurs will help them develop arms, ammunition, artillery, submarines, and aircraft with less difficulty.
How the Government spends on Defence infrastructure
There was a defence exhibition - DefExpo 2022 held in Gujarat a month ago. It was revealed that the Defence Ministry has restricted the import of 351 military items, across Naval Defence, Air Defence and Land Defence.
This demands a huge need for talent and research. If you can manufacture equipment such as drones, and Artificial Intelligence technology for Air Defence, and get them approved by the government, millions of orders will come in.
Remember how India created Mangalyaan with just a mere INR 450 crores ($73 Mn) and shocked almost every major power in the world? Countries struggling with inflation will turn to us for low-cost defence products.
As per the Innovations for Defence Excellence (iDEX) scheme, formulated by the Ministry of Defence, there will be budgetary support of Rs. 498.8 crores (approx $60.3 Mn), for 300 startups/ MSMEs/ individual innovators.
The aim of iDEX is to:
- Facilitate rapid development of new, indigenized, and innovative technologies for the Indian defence and aerospace sector.
- Create a culture of engagement with innovative startups, to encourage co-creation for the defence and aerospace sectors.
- Empower a culture of technology co-creation and co-innovation within the defence and aerospace sectors.
Very recently with the support of iDEX, Magic Business Incubator decided to fund defence startups with almost INR 20 crores (Approx $2.42 Mn).
Apart from that, there are plenty of other incubation centres in India that will cover all the registration, research and other expenses.
Jobs for CA in Defence
Most of the practising CAs or professionals are focused on providing financial and accounting solutions for fintech, crypto, and space.
But they are not entering into other unexplored sectors such as defence, space, and agriculture, which I am heavily betting on.
As numerous defence companies emerge, there would be a requirement for them to be advised. India is a burgeoning player in this space, hence startups still need to develop a clarity of concept.
That's where Chartered Accountants and finance professionals can help.
There are many areas of business where they can guide as mentors. They just need to look beyond their core areas of focus namely bookkeeping, accounting, GST, and income tax to name a few.
It's not an easy field to enter, so you have to keep researching and reading about things like defence registration and different types of equipment.
You can attend seminars to gain more knowledge on the topic or even get in touch with retired army or military officers.
Adani Group and Reliance Industries are just two of the many companies venturing into the defence sector. If you have experience with registration and compliance, then these companies may be interested in your services.
Professionals who are knowledgeable about this field are in high demand, so if you have the relevant skillset, make sure to put yourself out there!
The number of defence startups in India is around 194. The government is also looking to increase defence production by 2025. The budget for FY23 has been set at Rs 5.3 trillion, a 10 per cent increase from last year. These start-ups are focused on building innovative tech solutions that will help the government reach its target.