ET Awards 2021: Strong defence capabilities are irreplaceable when it comes to protecting national interests, says Defence Minister Rajnath Singh
I believe that all of you will agree that we are marching towards our goal of creating a new India, which is strong, prosperous and secure. The strength of a nation rests on two pillars — defence capabilities and the size of domestic economy. Only a prosperous country can support an adequate level of defence spending, improve the quality of its human resource and fund the science and technology ecosystem in the long run. The Ukrainian conflict has reminded us that strong defence capabilities are irreplaceable when it comes to protecting national interests.

GOVERNMENT INITIATIVES

The initiatives of our government to strengthen defence capabilities are also leading to a strengthening of our economy. I will highlight some of these. To ensure the participation of our domestic industry, the government has earmarked a large part of its capital acquisition budget for domestic procurement. For FY23, we have reserved 68% of the budget, which amounts to around Rs 85,000 crore. And within this, 25% has been reserved for the domestic private industry. To promote indigenisation, the defence ministry has brought out three positive lists. These have a list of items that will be bought only from domestic vendors, by following a deadline (to curb imports). You will be pleased to know that with just the first and second lists, we have been able to award contracts worth Rs 54,000 crore to Indian companies.

We hope that in the next five-seven years, this will increase to Rs 4.5 lakh crore worth of orders for the industry. The government has also reserved onefourth of the defence R&D budget for industry-led projects. This will encourage private players to enter the defence sector. In addition, we have taken steps to encourage foreign direct investment in the defence sector as well. Under the automatic route, the limit has been increased to 74% from 49%. Under the approvals route, this has been maximised to 100%.

With these steps, foreign investments will be encouraged, avenues will open for employment generation and India will have access to critical technologies. The Defence Research and Development Organisation (DRDO) is also providing free-of-cost technology to the industry.

Devendra Fadnavis, Rajnath Singh and Ashish Shela

Devendra Fadnavis, Rajnath Singh and Ashish Shela

The government has also corporatised the Ordnance Factory Board, converting it into seven defence PSUs. Six out of these seven have shown profits in the first six months of their functioning. Several steps like these have created a win-win situation for the armed forces, our domestic industry, startups and innovators. Recently, I launched a new edition of our Innovation for Defence Excellence (iDEX) initiative. iDEX Prime is a key initiative to promote innovators and startups. Under this, the defence ministry, armed forces, coast guard and defence PSUs share problem statements with the industry, in search of solutions. Projects selected under this are funded by the government.

This used to be Rs 1.5 crore in the past and has now been enhanced to `10 crore. I would like to thank ET for inviting me to this important event. ET has the largest readership among Indian business dailies and is among the most significant business-focused media products. ET has ensured that the common man gets access to important information. It has played an important part in explaining business and economy related issues to the common people. In fact, I would like to say that it has contributed the most towards this.

ET has made its readers active participants in the financial and business ecosystem of our country. It has created economic value for the nation and people follow it closely for political news as well. It is said that ‘with great power comes great responsibility.’ I have full confidence that in the future too, ET will continue meeting its responsibilities to the public.

NOTABLE CONTRIBUTIONS

The ET Awards give recognition to the efforts and contributions of those who have done their bit for building a better life for all our fellow human beings. Allow me to briefly recount their contributions, which have led to this recognition. Infosys has achieved fast growth during the pandemic on account of the wise bet it placed on the innovative cloudbased strategy. Adar Poonawalla rapidly scaled up Covid vaccine production capacity, which had an enormous impact on the vaccination trajectory of India as well as many other countries.

Prathap Reddy, through Apollo Hospitals, transformed the private sector healthcare paradigm in India. Samina Hamied has successfully steered Cipla on an accelerated growth path. Laurus Labs is one of the most profitable and fast growing API (active pharmaceutical ingredients) companies in India. Girish Mathrubootham’s 11-year-old company Freshworks provides software solutions to over 50,000 businesses at 13 global locations. It is India’s first SaaS startup to be listed on the Nasdaq, and its IPO has benefited two thirds of the company’s 4,300 employees who have stock ownership plans. HCL carries out its development agenda through its CSR arm set up in 2011. Punit Renjen, CEO, Deloitte, is the first Indian-origin executive to lead a Big Four professional services firm, and during the second Covid wave, he organised a coalition of US MNCs to provide critical equipment to India.

There is a common thread across the awardees. They have served humanity by creating shareholder wealth, by building better quality and appropriately priced products for their consumers, by paying and treating their employees well, and by serving the community at large in diverse ways.

The market economy must incentivise not only free play of the economic actors, but also fair play. Regulatory architecture must be put in place to ensure respect of the rules of free and fair play of market forces. Investor protection, environmental protection, respect for contractual provisions, etc, come readily to mind. Light-touch regulation based on cost-benefit analysis should be used at the macro level to align the incentives of the market participants towards efficient, equitable and sustainable, that is, socially optimal, outcomes. Anything beyond what is absolutely necessary tends to become over-regulation with deleterious effects on the free play of market forces, leading to inefficiencies and value destruction. The remedy becomes worse than the evil.

STATE OF THE ECONOMY

I will move on to the state of the Indian economy and its future prospects. The Ukraine conflict has created commodity-driven inflationary pressure across the world. India is exposed to hydrocarbon and oilseed prices, which are heading north. Global supply chain bottlenecks and other logistical choke points have stoked core inflation. Covid-19-induced disturbances and uncertainties have not allowed private consumption expenditure to recover as fast as it should have. Contact-based services remain in weakgrowth territory. Monetary tightening by the US Fed may create pressure on the rupee. Growth may slow down in our trading partner countries. And, finally, there is the risk of another wave of Covid. None of these problems were created by our society and government but came to us by the play of forces beyond our control. These headwinds are the challenges that we are facing today, and I have full confidence that we will surmount them.

I will not go for exact forecast numbers for GDP growth rate in the short term and the medium term, but consensus is blowing in the wind. India is poised to continue as one of the fastest-growing major economies in the world. The export numbers are record breaking and the trend is likely to move further up. If the economy is moving in the right direction, the director deserves our applause, more so when the director is helming something as complex and complicated as the third-largest economy of the world, in PPP terms.

This brings me to the last and the most prominent awardee this evening, Nirmala Sitharaman, the finance minister of India. As finance minister, she supervises five departments. Regarding the revenue department, tax buoyancy in such trying times, stable tax slabs and rates, and the faceless taxassessment system should be appreciated as great achievements.

Her expenditure management has been widely praised for ensuring that vital needs of government spending for defence, health, education, infrastructure and social welfare were adequately funded. Sitharaman’s budget making is the icing on the cake. Her decision to keep the powder dry during the first wave of Covid was questioned at that time, but her judgement was vindicated when the available fiscal firepower came in handy during the extended period of the pandemic. She is tirelessly striving to rationalise regulation and reduce the undue compliance burden on our market participants.

ET AWARDS

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