Indian Defense Industry
A bright future for Indian’s defense industry? The stars might be aligning for Indian’s defense sector. Here’s what the government and industry can do to seize the moment. Brasses Chubbier and Raja Dawn Indian’s defense industry, which has grown will have to learn to manage some uniquely substantially in recent years, seems headed for Indian requirements. Even better days.
Growth in domestic demand should continue to be robust, the government has To build tomorrows industry, Indian’s Ministry a clear vision for an indigenous defense Indus- of Defense and its contractors might look to ray, the country’s attractiveness to global defense mature markets such as France and the United companies is rising due to shrinking global Kingdom, as well as to developing markets defense budgets, and there is tremendous export such as South Korea, and apply some of the ideas potential in engineering services and combo- Indian Defense Industry By shirtwaist net sourcing. N core capabilities and focus efforts on building these in India. Other steps include improving The way forward is not without some signify- the talent market, building skills in the govern- can’t obstacles, however. In particular, the meet and private companies, and ensuring government’s new purchasing procedures must open
Need essay sample on "Indian Defense Industry"? We will write a custom essay sample specifically for you for only $ 13.90/page
Government capital spending several key categories have declined over the last quadrupled from $3 billion in 2000 to $12. 2 billion decade due to rising obsolescence and delayed n 2010. 1 By this measure, India was the sixth- procurement (Exhibit 1). Biggest spender on defense worldwide from 2000 McKinney on Defense 2013 to 2010. India defense Exhibit 1 of 6 Most capital spending was done through intergovernmental purchases, which are typically Exhibit 1 These intergovernmental purchases often include are licensed to produce the contracted equip- undertakings (Dupes)2 -?Indian companies that Inventory has declined for several platforms.
Count of equipment 2000 Some platforms have seen growth .. . While others are being depleted Tanks (Army) Fighters (Air Force and Navy) 2011 Surface combatants (Navy) Attack helicopters (Air Force) 155 mm howitzers 4,117 3,414 21% 758 -15% 410 310 1 The -24% 32 surface-combatants category includes destroyers, frigates, and corvettes, but not submarines. Source: The Military Balance, The International Institute For Strategic Studies, 2000 and 2011 editions 20 -38% McKinney on Government Spring 2013 Exhibit 2 of 6 Exhibit 2 The Defense Procurement Procedure, or EDP, guides standard procurement.
Indian defense purchasing includes 3 components Description 1 Standard procurement (EDP) Requirement Forms the basis of most capital purchases to ensure the best quality at the lowest price Includes 4 types of contracts: buy, buy and make, buy and make (Indian), and make 2 Intergovernmental agreement Upgrades are available to get classified in 1 of the above categories Includes procurement from friendly countries for strategic advantage and based on intergovernmental agreement: Indigenous content can offset requirements in other contracts Not required to meet EDP Deals could be negotiated to include offsets for EDP – Equipment purchases that benefit Indian armed forces but are based on suppliers’ contracting practices Procurement of in-service platforms 3 Strategic deals Includes procurement driven by strategic technological, or military benefits includes equipment purchases that are put to a tender that is either global or limited to Indian vendors. In “buy and make,” a contract is awarded to a foreign vendor; some procurement is from outside India, but equipment is produced or manufactured in the country. In “buy and make (Indian),” a contract is awarded to an Indian vendor; some procurement is from outside India, but equipment is produced or manufactured in the country. In “make,” systems are designed, developed, and reduced indigenously. Source: Defense Procurement Procedure, 2011, India Ministry of Defense; McKinney analysis meet.
For example, a large proportion of the However, growing demand has attracted many Indian Air Force’s fleet of Russian Suzuki Us-30 new industry participants-?Indian firms MIX fighter Jets was manufactured under such as Larsen & Doubt, Maidenhair, and Data, as license by Hindustan Aeronautics Limited (HAL) well as global “primes” and Memos such as BABE in India through the transfer of designs and Systems, Boeing, and Israel Aerospace Industries. Subsystems from the Russian original-equipment These companies have started to build market manufacturer (MOM). Dupes also undertake positions in air, land, naval, and communication new development; they have, for example, created systems.
While this development could make the industry more dynamic, it has not yet signify- Currently, Dupes are the only defense firms with scantly altered the industry structure, which a sizable presence in the country, and they are remains tilted toward Dupes. Highly vertically integrated, a factor that weighs against the development of an elaborate base An important development in the last decade was f defense suppliers. The creation of the Defense Procurement 47 Although progress from the Defense Procurement Procedure was modest at first, it has picked up in recent years; approximately $4. 3 billion worth of offset contracts have been signed and launched since 2007. Procedure (EDP) in 2002; it has since seen The next phase of growth many revisions and amendments.
The objectives We expect Indian’s $12 billion defense market of the EDP are to bring structure and to continue its strong growth trajectory through transparency to procurement and to build the capabilities of Indian’s nascent defense Eng is expected to reach between $18 billion and industry through offset obligations-?requirements $20 billions-?the second-highest growth rate that contractors source the equivalent of among the top 15 countries ranked by defense 30 percent of the foreign-exchange value of the spending. India will continue to be a large contract from Indian defense suppliers net importer of defense hardware; indeed, its (Exhibit 2). Import intensity will continue to be one of the highest among countries that procure at EDP has been in place for about ten years, and similar levels. Though progress was modest at first, it has kicked up in recent years; approximately $4. 3 Indian’s domestic demand likely will be set by billion worth of offset contracts have been five factors: signed and launched since 2007, most by Indian’s Air Force. As noted, most of Indian’s purchases ; hanging geopolitical scenarios on Indian’s are from other governments and thus are not borders may necessitate continual augmentation eligible for EDP. That said, procurement seems to of its defense equipment. Be shifting toward a EDP-led competitive process.
The recent deal for medium multimode ewe procurement will be necessary to replace combat aircraft (MARC), under negotiation obsolete equipment and to reach inventory levels with Desalt for the company’s Rafael Jets, is a required for combat readiness. Good example of an at-scale order (approximately $10 billion) put out for competitive bid. While this is a good sign for the program, internal security requirements will likely drive demand for homeland-security equipment. All things considered, it is still too early to Judge Dips impact in driving efficiency in the procurement process. ; throng underlying economic growth would allow s for increased government spending on defense. ; The entry of new companies in the market would