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India Defence and Security Report Q1 2011
Business Monitor International, Jan 2010, Pages: 110
Business Monitor International's India Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's defence and security industry.
India maintains a substantial defence force. Like most countries it scaled back the size of its military with the ending of the Cold War. In India’s case the reduction in force numbers was 120,000 troops, or 10.9% of the army’s strength. However, as the regional situation grew more serious, this policy was reversed. By 2003, the armed force levels were 4.7% higher than they had been at the end of the Cold War.
Historically, India sourced much of its military hardware from the Soviet Union. Since 1962 it has been Indian government policy to develop a local defence industry and reduce its dependence on imported equipment. India now possesses one of the largest and most sophisticated defence industries in the developing world. The defence industry is built around 39 state owned ordnance factories and 8 defencefocused government owned businesses. While the sector is nominally open to private sector companies they have been mostly confined to supplying raw materials or components to the state-owned factories.
Recently though India has begun entering into joint venture (JV) projects with other countries. It might be hoped this will reduce the level of bureaucratic delay that has marked many Indian defence projects. In January 2007, a project valued at US$549mn was signed between India’s Hindustan Aeronautics Limited (HAL) and Russia’s United Aircraft Corporation (UAC) to design and build a multirole transport aircraft. India and Israel have agreed to jointly develop a longer range variant of the Barak short range supersonic, vertically launched air defence system. Israeli Military Industries (IMI) has signed an US$11.6mn deal for the joint manufacture of advanced tank shells, with further orders expected to follow. Italy’s Fincantieri is to work closely with Cochin Shipyard in southern India on the flagship aircraft carrier project.
India needs to manage a complex combination of internal and external situations. Internally, after 60 years of independence, India faces a new challenge. Having kept the country together through decades of famine and poverty, the government now needs to create harmony and stability in a period of rapidly increasing, but terribly uneven, prosperity. Economic inequality, in terms of both present income and also economic opportunity, lies at the heart of most of the internal unrest.
Externally, the conflict in Kashmir is ongoing and brings India into proximity with both Pakistan and China. The most dramatic risk comes from Pakistan, its rather unstable but nuclear armed neighbour. It is unfortunate that it is the very size and capability of India’s conventional forces that has been a key driver behind Pakistan’s nuclear programme. Convinced they could not resist India in a conventional war, Pakistan looked to nuclear arms as a force multiplier.
Economically, India is performing well. Despite our rather bearish outlook for many of the world’s key economies, we expect India’s economy to continue growing at its present brisk pace throughout 2010 and 2011.
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