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INDIA DEFENCE MARKET REPORT Mod Prepared Exclusively for TEDAE (Asociación Española de Empresas Tecnológicas de Defensa, Aeronáutica y Espacio) By Security Risks Asia™ Sasia Security Risks.Com Pvt Ltd New Delhi. India. www.security-risks.com Editor: - Rahul K Bhonsle Director Sasia Security-Risks. Com Pvt Ltd Copyright Copyright of, “India Defence Market Report: Opportunity And Challenges Framework,” rests fully and irrevocably with TEDAE (Asociación Española de Empresas Tecnológicas de Defensa, Aeronáutica y Espacio) © 2014. Disclaimer The information provided in this Report has been obtained from public and private sources in the open domain. The information is believed to be reliable to the extent that is possible while viewing documents in the public domain. Accuracy of the information and analysis is not assured by TEDAE or Security Risks Asia™. Entities are advised to further investigate the information and validate the same based on their requirements and usage. The information in this Report is not a substitute for legal, investment or and other professional advice. TEDAE and Security Risks Asia™ will not be responsible for any loss arising from any action taken by anyone using this material. Methodology The Report is prepared mainly based on primary documents in the public domain to include government policy documents, annual and other reports, budget and financial documents, parliamentary committee reports, official government press releases, press releasezs by companies and media reports. The analysis is based on rigorous cross checking of sources with the aim to provide a perspective to the readers of the overall contours and trajectory of Indian Defence acquisitions. This is subject to change based on additional information that may be available publicly from time to time and thus should be reviewed in the light of the same. 2|TEDAE (ASOCIACIÓN ESPAÑOLA DE EMPRESAS TECNOLÓGICAS DE DEFENSA, AERONÁUTICA Y ESPACIO) OVERVIEW In the early 21st Century India’s rise as an emerging and responsible power in Asia was slowly acknowledged across the World. The country of over one billion people where democracy has strong roots signified political stability driven by aspirations of the masses. While India’s defence and military capability had been formidable it was based on a strategic alliance with the former Soviet Union. The end of the Cold War saw weakening of decades old ties with the military industrial complex inherited by Russia unable to substitute the former Soviet Union. India began looking for importing weapons and equipment from across the World. This was also a time when the economy of the country grew over 8 percent giving the government sufficient leeway for spending resources for defence modernization. The growing threat paradigm with an aggressive neighbor in China and legacy of war fighting with Pakistan sustained the necessity for defence modernization. Evolution of a viable defence acquisition process was a part of this process, with continuing dependency on imports given low technology base and industrial capacity. The need for strategic autonomy has led to aspirations for creation of an indigenous base, thus the Defence Procurement Procedure incorporated interventions such as Direct Offsets. Joint ventures were encouraged with opening of defence to the private sector and greater acceptance of foreign collaboration. To encourage investment and induction of technology FDI which had been static at 26 % has been enhanced to 49 %, not satisfactory to attract major players but denotes the trajectory ahead. A recent defining moment in this pathway is the election of a majority Bharatiya Janata Party (BJP) conservative nationalist government in power in New Delhi with a well recognized administrator, Mr Narendra Modi as the Prime Minister. This has ended the coalition era which has been the bane of national polity in India for the past many decades. Mr Modi demonstrated admirable vision providing impetus to defence modernization through an expanded base for industrialization with policies such as “Make in India,” and is a keen advocate of public-private partnerships and foreign collaboration. 2014-15 may therefore be the right period to take a fresh look at entry into the Indian defence sector. With that in view the “India Defence Market Report: Opportunity And Challenges Framework,” provides an overview of the Indian defence market at large. Set in Six sections and 18 Chapters, the report provides an informative and analytical look of basic factors propelling defence modernization by India, various policies and procedures related to procurement with the main who’s who in Ministry of Defence and allied agencies responsible for the same. An in depth analysis of the Defence Production Policy 2011, Defence Procurement Procedure 2013, Offsets guidelines and so on is provided. Issues such as foreign direct investment, industrial licensing policy & joint ventures have been covered outlining the scope for entry of foreign companies in India. Budgeting and resource allocations for capital acquisitions are outlined including specific programmes that are ongoing at present by the army, navy, air force and coast guard. Future technology requirements projected by the armed forces have been covered along with an outline of technology centres of the Defence Research and Development Organisation (DRDO). Defence production agencies in the government, public and private sector have been covered with a comprehensive list and contact details of over 1200 registered defence companies in India. TEDAE (ASOCIACIÓN ESPAÑOLA DE EMPRESAS TECNOLÓGICAS DE DEFENSA, AERONÁUTICA Y ESPACIO) | 3 Throughout the Report notes on various nuances of policies and procedures and recommendations for Spanish companies have been covered. The Report separately provides a bank of primary source documents that will come in handy for reference How To Use this Report? The Report is recommended to be used in the following manner:- To gain an overview of present structure and possible trajectory of defence acquisitions in India. To obtain a perspective on opportunities and challenges in this sector particularly for foreign companies. To gain an insight into the key policies and procedures in place. Recommendations on key policy aspects for foreign companies. Defence policy and decision making hierarchy including selected Who’s Who. Overview of the defence industry and R &D in the government, public and private sectors. A direction to primary sources such as government policy and procedures. Major Abbreviations Used Throughout the Paper A AAP- Annual Acquisition Plan ANURAG-Advanced Numerical ACAS (P) – Assistant Chief of Staff Planning Research & Analysis Group ACNS (P&P) – Assistant Chief of Naval Staff AoA- Articles of Association (Planning & Production) AON- Acceptance of Necessity ACE- Armament & Combat Engineering Systems APBG- Advance Payment Bank ACVs- Air Cushion Vehicles Guarantee ADA- Aeronautical Development Authority APMS- Automated Power Management ADE- Aeronautical Development Establishment System AERO- Aeronautical Systems APU- auxiliary power unit AESA- Active Electronically Scanned Array ARDE- Armament Research & AFVs- Armed Fighting Vehicles Development Establishment Af Pak –Afghanistan Pakista ASSOCHAM – Associated Chamber of AIP- Air Independent Propulsion Commerce AIS- Automatic Identification System ASW – Anti Submarine Warfare AJTs- Advanced Jet Trainers ATT- Arms trade treaty ALH- Advanced light helicopters ATAGS- Advanced Towed Artillery ALWT- Advanced Light Weight Torpedo Gun System AMS-Akash Missile System ATGMs - Anti-tank guided missiles ANC- Andaman and Nicobar Command AWACS – Airborne Warning and Control System 4|TEDAE (ASOCIACIÓN ESPAÑOLA DE EMPRESAS TECNOLÓGICAS DE DEFENSA, AERONÁUTICA Y ESPACIO) B BCD- Basic Custom Duty BJP -Bharatiya Janata Party BDL- Bharat Dynamics Limited BMC- Bi-Modular Charge B&D- Base & Depot BTA- Basic Trainer Aircraft BE – Budget Estimates BVRAAM- Beyond Visual Range Air- BEL- Bharat Electronics Ltd to-Air Missile BEML- Bharat Earth Movers Ltd C CAD- Current Account Deficit CII- Confederation of Indian Industry CAS - Chief of Air Staff CISC- Chief of Integrated Staff CABS- Centre for Air Borne Systems COAS – Chief of Army Staff CAIR- Center for Artificial Intelligence & CONS – Chief of Naval Staff Robotics COMINT- Communication Intelligence CBI- Central Bureau of Investigation CNC- Contract Negotiation Committee CBRN- Chemical, Biological, Radiological and CKD- Completely Knocked Down Nuclear CSO- Chief Security Officer CCS-Cabinet Committee on Security CNC- Contracts Negotiation CCEA- Cabinet Committee on Economic Affairs Committee CDS- Chief of Defence Staff- CNR- Combat Net Radio CEO- Chief Executive Officer CNS- Chief of Naval Staff CEP- Circular Error of Probability CSN- Coastal Surveillance Network CEMILAC- Center for Military Airworthiness & CST- Comparative Statement of Certification Tenders CFA- Competent Financial Authority COAS- Chief of Army Staff CFEES- Center for Fire, Explosive and COTS- Commercially Off the Shelf Environment Safety CVD- Countervailing Duty CGDA- Controller General of Defence Accounts CVRDE- Combat Vehicles Research & Development Estt D DA - Development agency DIP- Defence Industry Partner DAC - Defence Acquisitions Council DIPR-Defence Institute of DAC/DPB- Defence Acquisition Council Psychological Research DARE- Defence Avionics Research DIRCM- Directed Infrared Establishment Countermeasure DCF - Discounted Cash Flow DLJ-Defence Laboratory DCNS – Deputy Chief of Naval Staff DMGs- Digital
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