The Indian Army is amongst the top 4 largest armies in the world. In 2015-16 it imported US$5.5 billion of defence equipment to meet approximately 70% of its requirements.
India is executing defence projects using indigenous technologies and skills, including Advanced Towed Artillery Gun System (artillery modernization), Basic Trainer Aircraft HTT-40 developed by HAL, indigenous naval systems viz. ABHAY, HUMSA UG, NACS and AIDSS for underwater surveillance capability.
India is emerging as a global R&D hub for foreign entities, including for Rockwell Collins, Boeing, Textron GE and Honeywell.
Indigenous Capability In 2001 the defence sector was opened up to private investment, subject to licensing. Policy initiatives like Raksha Udyog Ratnas (for public/private companies with expertise), and defence offsets were introduced to promote a competitive eco-system and encourage private participation.
India aims to build a domestic industrial base for defence products and achieve more than 60% indigenisation, and is supporting strategic partnerships with foreign OEMs. Modern equipment has a greater emphasis on cyber security, and digital technology approaches to warfare, which provides an opportunity to collaborate with Government organizations like the Defence Research and Development Organisation (DRDO) and Defence Public Sector Undertakings like HAL, Bharat Electronics Ltd., Bharat Dynamics Ltd., Mishra Dhatu Ltd.
Key Statistics
Some key defence products include:
Challenges The Indian defence industry is mostly State-owned and susceptible tonon-competitiveness, delays in finalization of orders, and sluggishness in improving acquired technologies.
Incentives
Government Initiatives
Foreign Domestic Investment (FDI) FDI in the sector is subject to security clearances. Investment up to 49% is permitted under the automatic route. Requirement of single largest Indian ownership of 51% of equity removed. Lock-in period of three years on FDI equity transfer removed.
Contenders for deals include global players from Russia, Israel, Germany, Japan and France. Some prominent foreign entities in the Indian defence market are:
Strategic Partnerships Under the new strategic partnership model private companies may bid for mega deals viz. submarines, single-engine fighter aircraft, helicopters and armoured vehicles. Entities likely to bidare Larsen & Toubro, Mahindra and Mahindra, Adani Group, Tata Advanced Systems Ltd., and Reliance Defence.
Some new entrants are: CRON Systems Pvt. Ltd.,Comint Systems and Solutions Pvt. Ltd., Ideaforge Technology Pvt. Ltd., Tonbo Imaging India Pvt. Ltd., Viz Experts India Pvt. Ltd.
Industry Opportunity Indian private companies and publicly funded research laboratories are seeking international partners to make good deficiencies in the sector. There is significant opportunity in the high quality component manufacturing such as resistors, capacitors, diodes; general supplies such as nuts, bolts, washers; special purpose gears; aero-engines, generators/alternators; and electronics such as components for radars, communication equipment. Policies are being synchronised with the changing reality, indicating assurance of orders and encouraging international collaboration. | ||||||||||||||||||||||