India Defense Industry: Global Trends: The country’s nine state-owned military firms exported products worth just US$100M in 2009. India was ranked 11th worldwide in terms of overall defense expenditure in 2007 but 41st globally between 2002 and 2006 in terms of defense exports.
The ability of India’s defense industrial base to meet domestic requirements in a timely and cost-effective manner has been questionable. While the output of items such as light vehicles and ammunition has been satisfactory, major platforms have faced significant delays. Both the Light Combat Aircraft and the Arjun main battle tank fell more than a decade behind schedule, while the Kaveria aircraft engine (designed for LCA) and the Advanced Technology Vessel submarine both fell behind by around 20 years.
There has been an acceptance on the part of India’s Government that private sector involvement in the defense industrial sector is desirable, given that it would be reasonable to expect competition to encourage innovation and efficiencies.
A two-tier defence sector continues to exist. Rahul Chaudry, chief executive of Tata Power – an arm of the private Tata conglomerate that has expanding interests in defense manufacturing – said he believes the Government needs to achieve fairness if targets (specifically 70% self-reliance) are to be met. “The big question is actually a very simple one: Is the Indian government willing to put a stop to its protectionist policies that continue to favor the Government’s own companies?”
Foreign Direct Investment
India has permitted foreign-owned companies to invest up to 26% of a local defense enterprise since 2001. There have been calls to increase the FDI cap to 49%. Indian authorities have taken a sluggish approach to the establishment of defense JVs. The FIPB said in September 2009 that it had decided to defer separate bids submitted by Vyoneech Technologies in New Delhi and the Tata Group to create such ventures. Vyoneech was seeking to create a JV with an unnamed foreign company to design and manufacture unspecified defense electrical equipment.
Tata, meanwhile, looked to create a JV with Israel Aerospace Industries (to be named Nova Integrated Systems) to produce unmanned aerial vehicles, radars, and electronic warfare and security systems. Earlier in the same month, the FIPB deferred for a second time its decision on whether to approve a defense-related JV between EADS Deutschland GmbH and private Indian company Larsen & Toubro, in addition to deferring a decision on a JV proposal submitted by Taneja Aerospace and the Tamil Nadu Industrial Development Corporation to establish defense maintenance, repair and overhaul facilities.
Amritt utilizes our experience and experts to work with you on the following core categories in our defense sales practice.
* Executive Training and Guidance
* Defense Opportunity Identification, Development and Capture
* Analysis of the Indian Procurement Process
* In-Country Staffing
