Overview (Indian Military and defense Manufacturing Industry)
With rising tension at the borders India certainly needs to be well equipped with modern arms and ammunitions. Indian government seems to be well cognizant of this fact and has been taking efforts to strengthen the country’s military position. The announcement of no-import weapons list recently, by the Indian government is one of the very crucial steps for the development and growth of the Indian military and defense manufacturing industry. While India has primarily been a significant importer of military and defense products, the announcement is certainly a silver lining for the underdeveloped Indian military and defense manufacturing industry. The crucial category of equipment in the non-import list include sniper rifles, artillery guns, several types of missiles, ammunitions, ballistic helmets, missile destroyers, transport aircrafts, light combat helicopters, sonar systems, radars and many more.
Current scenario of Defense Manufacturing in India
In the present scenario, India is one of the top importers of military and defense products in the world. During the period (2015 – 2019), the country accounted for around 10% of the global arms import, which is almost double in comparison to the Chinese arms import during the same period. In the past two years, India has purchased over 140,000 assault rifles from the United States, the cost of which, is estimated to be over 1,500 crore rupees. However, this procured volume accounts for less than 20% of the overall requirement that the country actually has in the present scenario. In coming (5 – 7) years, a total of over 500,000 additional assault rifles will be procured by the government. Similar is the demand for sniper rifles in the country. While the expected orders for sniper rifles stood at around 1,800 units in 2000, the actual requirement that the country has in the present scenario, is over 5,500 units. Such a huge demand for small arms also creates a huge requirement for ammunition and bullets, most of which are also procured from the foreign markets.
Indian Military & Defense Manufacturing Industry
Combat aircrafts is another category where the Indian government has been spending exorbitant money in an effort to strengthen its military power. An order of 36 Rafale jets placed by the Indian government, to France, in 2016, at an estimated deal size of $9.4 billion is considered to be one of the most important military deals for India. However, at present, India has a total of less than 700 combat aircrafts out of which less than 50% meet are efficient enough to match the global standards. Contrarily, China has over 2,000 highly advanced combat aircrafts which are capable enough to match any air-to-air or air-to-ground combat needs.
Indian Defense Manufacturing Market Potential
The above mentioned are just few from an exhaustive list of military and defense equipment, arms and accessories that the Indian government will heavily invest in the coming years. As the country is gradually emerging to be a stronger power, becoming self-dependent in the field of military and defense is one of the most crucial strategies that it seems to be adopting. As the government announced its plan to provide contacts worth INR 4 Lakh Crores in the next five to seven years, to the home market, a range of manufacturing opportunities will open up in the Indian military and defense manufacturing sector. Also, as the country sets an export target of $5 billion in the next five years, the government seems to be on the right path of transitioning the country from being a huge importer of military and defense equipment and machinery to becoming self-dependent market and also an exporter to other global markets. However, the road to this transition would be fraught with challenges.
As already pointed out earlier, the Indian military and defense manufacturing industry needs a lot of advancements in terms of product quality enhancement, technological up gradation, capacity expansion and meeting the delivery deadlines. To capitalize upon this opportunity, it is crucial that the Indian as well as foreign military and defense equipment manufacturers identify the right business areas and capability sharing mechanisms to create value for the entire stakeholders in the value chain. Our upcoming articles will be focused on the Indian military and defense manufacturing sector, with a supply side assessment of every potential market segment and insights on manufacturing strategies, investment opportunities, route to market entry and supplier assessments.