Modernization of armed forces
$ 130 bn opportunity in coming 7-8 years
This page has been last updated on - Nov 06, 2019
Snapshot
Defending the World
India plans to spend $ 130 bn on military modernization in the next 5 years, as achieving self- reliance in defence production is a key target for the Government of India. The Government has opened up the Defence industry for private sector participation to provide impetus to indigenous manufacturing. The opening up of the industry also paves the way for foreign original equipment manufacturers to enter into strategic partnerships with Indian companies.
A Defence export strategy has been formulated with a view of facilitating Defence Public Sector Enterprises (DPSUs) and private defence players in exploring business opportunities abroad. Domestically produced defence platforms, equipment, and spares worth $ 317 mn were exported to over 28 countries in 2015-16.
100% FDI is allowed in defence industry; wherein 49% is allowed under automatic route and beyond 49% through Government route.
For further details, please refer FDI Policy
2.3 %
GDP spent on defence
15 %
Share in global arms import
$62.8 bn
Union budget 2018-19
309 mn
Exports (2016)
Second largest armed forces in the world
Ongoing DRDO projects in India of worth $ 7.3 bn
30% offset requirement for procurement of equipment in excess of $ 307.69 mn
Industry Scenario
5.3% increase in defence allocation was recorded in budget 2017-18 compared to budget 2016-17.
The allocation towards defence in budget 2017-18 stood at $ 41 bn with $ 13.3 bn (or 31.7% of the total budget) reserved for capital expenditure.
The total budget sanctioned for the Indian military for the financial year 2018-19 is $ 62.8 bn; accounting for 12.1% of the total Union Government expenditure for 2018-19.
India’s share in global military expenditure stood at 3.3% in 2016.
Service/ department-wise allocation as a percentage of total defence estimates 2017-18 (BE):
- Army: 55.9%
- Navy: 14.6%
- Airforce: 22.5%
- DGOF (Directorate General of Ordnance Factories): 0.8%
- DGQA (Director General of Quality Assurance): 0.5%
- R&D: 5.7%
Growth Drivers
Defence exports strategy
Liberalised process of issuing clearancesOnline NOCs
Started in November 2014 for industry friendlinessShore Based Test Facility (SBTF)
Improved test facilities leading to more local manufacturingIndigenously Designed, Developed & Manufactured (IDDM)
Focus – Buy and make IDDM, Indian over globalModernization programmes
$ 0.7 bn allocation for modernisation
Recent Announcements
Kalyani Rafael Advanced Systems (KRAS), a joint venture between Kalyani Group and Israeli defence equipment giant Rafael Advanced Defense Systems, will produce 1,000 units of Barak 8 MR-SAM missile kits worth $ 100 mn over the next four years. These will be supplied to India’s state-run defence manufacturer Bharat Dynamics Ltd (BDL) for further integration.
Lockheed Martin to start producing Made-in-India F-16 wings in next 2-3 years
New Tata-Boeing venture will roll out Apache chopper cabins from Hyderabad
Sterlite, a global technology leader in web-scale digital networks, has been awarded a $ 539.0 mn Advance Purchase Order to design, build and manage the Indian Navy's communications network. This will give the Indian Navy digital defence supremacy at par with the best naval forces globally.
Infrastructure development
Manufacturing cluster & park planned in Pune & Dholera
R&D
$ 15.4 mn allocated to set up ‘Technology Development Fund’
Indigenously designed, developed and manufactured (IDDM)
New category of capital procurement
Investible Projects
Investment Opportunities in Defence Manufacturing
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Projects
5
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Opportunity
$549.9 mn
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Promoters
1
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District
1
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Private Projects
0
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Govt. Projects
5
Major Investors
Data on Map
Latest in Defence Manufacturing
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Report
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Brochure
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Brochure
Defence Manufacturing Sector
Report
Setting up Business in India
FAQ
Frequently
Asked Questions
What is the defence sector overview in recent times?
The Achievement report of the defence sector covering policy initiatives, R&D and other important areas can be accessed on the link.
Is there funding provided by the government for certain categories?
Yes, projects under 'Make-I' sub-category involves Government funding of 90%, released in a phased manner and based on the progress of the scheme, as per terms agreed between MoD and the vendor.
Are the any incentives for MSMEs under DPP?
DPP 2016 provides great impetus to the MSMEs with certain categories of 'Make' products earmarked exclusively for MSMEs.
How are the capital acquisition schemes classified under DPP?
Capital Acquisition schemes are broadly classified as 'Buy', 'Buy and Make' and 'Make'. In decreasing order of priority the procurement of defence equipment, under this procedure are categorised as follows:
1) Buy (Indian - IDDM).
2) Buy (Indian).
3) Buy and Make (Indian).
4) Buy and Make.
5) Buy (Global).What is the Defence Procurement Procedure (DPP) 2016?
The DPP is formulated to ensure timely procurement of military equipment, systems and platforms as required by the Armed Forces in terms of performance capabilities and quality standards, through optimum utilisation of allocated budgetary resources. It is worthwhile to mention that the document is not merely a procurement procedure but also an opportunity to improve efficiency of the procurement process to realize the vision of 'Make in India' in the defence sector.
Stakeholders
Government Ministry/ Department
Industry Association
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By: Uday Munjal30 June, 05:29 PM
New India Experiences
“It has been an excellent ride and I would like to thank Invest India for the kind support and guidance. Invest India and Make in India team has been our biggest supporter in all w... Read More
From: Mr Nikunj Parashar , CEO, Sagar Defence Engeneering -
By: Invest India26 June, 03:56 PM
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