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Indian Defense Market, Forecast to 2026

  • ID: 4316528
  • Report
  • June 2017
  • Region: India
  • 105 Pages
  • Frost & Sullivan
New Policy Dynamics, Market Requirements, and Programs Present Myriad Opportunities for Companies

According to SIPRI, India was the largest arms importer in the world during 2011-2015. The Indian government has revised the procurement policy after seeking responses from industry stakeholders. The author has analyzed the competitive landscape of defense in India, which consists of public sector undertakings (PSUs), foreign defense companies, and emerging Indian companies. The Indian Armed Forces have not been able to spend the entire defense budget allocated, owing to straitjacketed procurement procedures and inherent delays; and the gap between allocated and actual defense spending has been increasing over the years. It is expected that the underspend in defense is to decrease during the forecast period, as the government modifies policies to simplify procurement. Reduced underspending will drive defense budgets and the market will expand.

While the three services have had several modernization plans under way, some of these have been stalled due to the lack of clarity and coherence in procurement. The Indian government seeks to address this through the new Defense Procurement Policy (DPP) 2016 that is aimed at streamlining procurement and giving more leeway to suppliers, opening up Foreign Development Investment, allowing single vendor participation for tenders, and initiating a “Strategic Partner” model.

The government is outlining policies to convert India into a defense hub, with indigenous manufacturing being given the highest priority. Defense exports will be permitted and foreign direct investment (FDI) holdings have been tweaked to enable more foreign original equipment manufacturers (OEMs) to set up ventures in India. Several multi-billion dollar projects are expected to come to fruition. While a few of these projects will be executed through government-to-government (G2G) and off-the-shelf purchases, the majority will be through partnerships between indigenous companies and foreign OEMs. Offset regulations are being relaxed to speed up procurements and provide flexibility for suppliers while approaching tenders. The focus is on fast-track deals, tailored projects with Indo-foreign OEM partnerships, and involving micro, small, and medium enterprises. As per the Defense Procurement Policy 2016, the way ahead for India is by developing indigenous capabilities in defense through foreign collaboration. This is a critical time for foreign OEMs. The decisions made now, in terms of partnerships with emerging Indian firms, leveraging key clauses in the Defense Procurement Policy 2016 and understanding the track of Indian modernization, will help them win contracts and reap benefits. The report presents certain insights necessary to help companies proactively establish themselves in a position of competitive advantage in India.

The expanding Indian Defense Market is at an inflexion point. Companies should be cognizant of changes in procurement policy brought out through the revised defense procurement policy 2016 (DPP 2016) in order position themselves at a competitive advantage. The new policy presents latent opportunities that firms can take advantage of in order to establish themselves in one of the largest defense markets in the world. Platform obsolescence and extensive defense modernization (underway and planned) makes India a key market for defense equipment. There will never be an absence of demand. The changes brought about by “Make in India” and the “Defense Procurement Policy 2016” can be used to a OEMs advantage to gain a firmer foothold in the market. By expanding partnerships with emerging Indian defense companies, utilizing India’s vibrant micro, small and medium enterprise (MSME) sector and leveraging new policy measures a defense company can place itself in a position to successfully compete and win contracts in India.

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1. Executive Summary

  • Key Findings
  • CEOs’ Perspective
  • Key Questions this Study will Answer

2. Indian Defense Market Analysis

  • Country Outlook
  • Country Outlook-External Challenges
  • Country Outlook-Internal Challenges

3. Drivers and Restraints

  • Market Drivers
  • Drivers Explained
  • Market Restraints
  • Restraints Explained

4. New Developments, Procurement Stakeholders, and Policies

  • Developments in the Indian Defense Industry

5. Procurement and DPP 2016

  • Procurement Process and Decision Makers
  • Procurement and Offset Dynamics
  • Procurement Categories and FDI Norms
  • New Procurement Policy and Industry Implications
  • Procurement Categories

6. Defense Budget Forecast

  • Defense Budget Spending Analysis
  • Defense Spending Projections-Business as Usual Scenario
  • Defense Spending Projections-Active Implementation Scenario

7. Industry Landscape and Partnership Road Map

  • Changing Industry Landscape
  • Partnership Road Map

8. Defense Technology Road Map and Opportunities

  • Defense Technology Road Map and Opportunities-General
  • Defense Technology Road Map and Opportunities-Air Warfare
  • Defense Technology Road Map and Opportunities-Land Warfare
  • Defense Technology Road Map and Opportunities-Maritime Warfare
  • Defense Technology Road Map and Opportunities-Marine Engineering

9. Case Studies

  • Case Study-Incentivizing Development of Defense
  • Case Study-Developing Indigenous Capability
  • Case Study-Indian and Foreign OEM Partnership

10. Modernization Programs Tracker

  • Key Modernization Programs Tracker

11. Competitive Landscape-Key Established Participants

  • Competitive Landscape-Foreign Participants
  • Competitive Landscape-Government Participants
  • Competitive Landscape-Emerging Indian Companies

12. Growth Opportunities

  • Growth Opportunity-Leveraging Partnerships: DPP 2016
  • Growth Opportunity-Multiple Bids: DPP 2016
  • Growth Opportunity-Leveraging Micro, Small, and Medium Enterprises (MSME): DPP 2016
  • Growth Opportunity-Enhanced Performance Parameters: DPP 2016
  • Growth Opportunity-New Capabilities
  • Strategic Imperatives for Success and Growth

13. Conclusions and Strategic Recommendations

  • Conclusions and Strategic Recommendations
  • Legal Disclaimer
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