The defense sector in India has had tremendous activity in the past two years since the Government of India’s “Make in India” initiative was introduced, indicating interest from both foreign OEMs and the Indian private sector. Foreign OEMs are more eager than ever to take part in “Make in India” in the defense sector, even as the Indian industry has been gradually increasing its capacity. Long-needed and significant improvements have been implemented to make it easier to do business in defense procurements under the direction of the Hon. Raksha Mantri. The Indian government has cleared the path for a strong defense industry in the nation, whether it is through the new Defence Procurement Procedure (DPP 2016) or the relaxing of regulations for foreign direct investment in the defense sector. In every field of aerospace and defense, Indian industry provides extremely high levels of engineering and technological expertise.
Defence
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In 2016, the Indian government released an updated version of the Defense Procurement Procedure (DPP). This process encourages FOEMs to work with their Indian partners on co-development and co-production projects. Additionally, the DPP’s definition of an Indian vendor permits joint ventures between Indian businesses and foreign original equipment manufacturers to take part in the Ministry of Defense’s capital procurement programs. ITA has embraced the improvements that are beneficial to the industry. An article about “Make in India in Defence” written by ITA Director General Mr. Chandrajit Banerjee and published in the Indian Express demonstrates the organization’s dedication to Made in India. Article/opinion/columns/make-in-india-in-defence-dpp-2016-defexpo-ita-reports/: http://indianexpress.com. Additionally, the Defence Procurement Manual (DPM 2009), which addresses revenue procurement, is being revised. Since the private sector was allowed to participate in defense manufacture, ITA has been at the forefront. A number of ITA requests that are necessary to establish a thriving domestic defense industry sector have already been granted by the Indian government. Leveling the playing field, raising the FDI cap, providing test facilities, extending the validity of industrial licenses, and issuing a security manual for businesses that hold industrial licenses are just a few examples.
With almost 5% of all defense spending worldwide, India is currently the fifth-largest spender. Over the next five years, defense spending is predicted to increase at a rate of 7% to 8% per year, continuing its recent upward trend. The rise in expenditure also shows how many chances there are for both domestic and international businesses operating in the aerospace and defense industries. The Indian Army receives 56% of the overall defense budget, followed by the Indian Air Force (22%), and the Indian Navy (14%). The Ordnance Factory Board receives 1% of the defense budget, defense research and development receives 6%, and other activities receive the remaining 1%. The Government of India has taken a number of steps to establish a domestic defense industry base, opening the door for indigenous capabilities to meet the demands of the Indian Armed Forces, even though the majority of weapon systems and equipment are imported from foreign OEMs.
The foundation of the Indian government’s “Make in India” strategy is the defense and aerospace industry. The goal of “Make in India” should also be to promote and incentivize the involvement of Micro, Small, and Medium-Sized Enterprises (MSMEs) in defense manufacturing. For Indian businesses, defense offsets provide enormous prospects. It is anticipated that the defense sector will spearhead the government’s Make in India campaign with purchases totaling more than USD 250 billion over the next ten years. The MoD has authorized 85 schemes totaling Rs. 1,60,362 Cr under the “Buy and Make (Indian)” category in the recent 30 months, which is a positive trend.
India’s emergence as a responsible global power is demonstrated by her membership in the MTCR club and the United States’ classification of her as a Major Defense Partner.
India recently signed significant G2G agreements with France for 36 Rafale fighter jets with 50% offset liability, the US for 145 M777 ultra-light howitzers with US$200 million offset, and Russia for five S-400 Triumph Long Range Air Defence Missile Systems, all of which capitalize on India’s defense needs as a crucial component of diplomacy. It is anticipated that the prime minister’s most recent trip to Israel will strengthen India and Israel’s defense relations.
To serve as a single point of contact for industry inquiries about investment prospects in the defense and aerospace sectors, the Department of Defence Production, MoD, established the Defence Investor Cell. Please visit https://defenceinvestorcell.gov.in for additional information.