In the last two years, since the launch of “Make in India” initiative of the Government of India, Defence Sector in India has seen immense activity, evincing interest from Indian private industry as well Foreign OEMs. While the Indian industry has steadily moved towards capacity building, Foreign OEMs have shown never seen before enthusiasm to participate in ‘Make in India’ in Defence. Under the leadership of the Hon’ble Raksha Mantri, long pending and critical changes have been made to bring in ease of doing business in Defence procurements. Whether it is relaxation of norms for FDI in Defence or the new Defence Procurement Procedure (DPP 2016), Government of India has paved way for a robust defence manufacturing in the country. Indian defence industry has now developed the competence, capability and capacity to produce sub-systems which could be integrated into larger platforms. Indian industry offers very high level of engineering and technology skills in all areas of defence and aerospace.
The Government of India promulgated a new version of Defence Procurement Procedure (DPP) in 2016. This procedure encourages co-development and co-production approach by FOEMs, with their Indian Partners. Further, the definition of Indian Vendor in DPP makes it possible for Joint Ventures between Indian Companies and Foreign OEMs to participate in the capital procurement schemes of Ministry of Defence. CII has welcomed the industry friendly changes. Article by Director General of CII, Mr Chandrajit Banerjee on ‘Make in India in Defence’ appeared in Indian express and is a testimony of CII’s commitment to Make in India. http://indianexpress.com/article/opinion/columns/make-in-india-in-defence-dpp-2016-defexpo-cii-reports/. Defence Procurement Manual (DPM 2009) which deals with revenue procurement is also under revision. CII has been at the forefront ever since the defence manufacturing was opened up for the private sector’s participation. Government of India has already accepted several requests of CII which are essential for creating a vibrant domestic defence industrial sector. Extension of validity of Industrial License, promulgation of Security Manual for Industrial Licensee companies, level playing field, increase in the FDI limit, availability of test facilities, to name a few.
India is currently the fifth largest spender on defence and accounts for approx 5% of the global defence expenditure. The defence spending has been growing in recent years and is expected to grow at the rate of 7% to 8% annually over the next five years. The increase in spending also indicates the huge availability of opportunities for the domestic and global companies in the defence and aerospace sector. 56% of the total defence budget is being allocated to Indian Army, 22% to Indian Air Force and 14% to Indian Navy. 6% of the total defence budget is allocated for defence Research & Development, 1% to Ordnance Factory Board and remaining 1% for miscellaneous activities. Though most of the weapon systems / equipment are imported from foreign OEMs, the Government of India has taken several initiatives to create a domestic defence industrial base, paving way for the indigenous capabilities to cater for the needs of the Indian Armed Forces.
Defence & Aerospace sector is at the core of ‘Make in India’ campaign of the Government of India. ‘Make in India’ should also target encouraging and incentivizing Micro, Small and Medium Enterprises’ (MSMEs) participation in the defence manufacturing. Defence offsets provide huge opportunities to Indian companies. With over USD 250 Bn worth of procurement over next 10 years, the Defence Sector is expected to lead the Make in India initiative of the Government. In last 30 months, setting an encouraging trend, MoD has approved 85 schemes worth Rs.1,60,362 Cr under “Buy and Make (Indian)” category.
India's membership to MTCR club, and her designation as a Major Defence Partner by USA is a testimony to India's rising stature as a responsible global power.
Leveraging India’s Defence requirements as a critical part of diplomacy, India has inked major G2G deals recently with France for 36 Rafale fighter jets with 50% offset liability, with US for 145 M777 ultra-light howitzers with US$ 200 Mn offset, with Russia for 5 S-400 Triumph Long Range Air Defence Missile Systems. Prime Minister’s most recent visit to Israel is expected to further deepen India’s defence cooperation with Israel.
Defence Investor Cell has been set up Department of Defence Production, MoD to act as single point of contact for all queries of industry related to investment opportunities in Defence and Aerospace sector. For more details please visit https://defenceinvestorcell.gov.in.
In the last two years, since the launch of “Make in India” initiative of the Government of India, Defence Sector in India has seen immense activity, evincing interest from Indian private industry as well Foreign OEMs. While the Indian industry has steadily moved towards capacity building, Foreign OEMs have shown never seen before enthusiasm to participate in ‘Make in India’ in Defence. Under the leadership of the Hon’ble Raksha Mantri, long pending and critical changes have been made to bring in ease of doing business in Defence procurements. Whether it is ...