Defence & Security Sector in India Challenges & - PowerPoint PPT Presentation

Defence & Security Sector in India Challenges & Opportunities & Procurement Policy by Maj. Gen. (Retd.) Dr. B. Yadav, Q -Tech Synergy Tech Synergy

Presentation Outline  Defence Procurement  Defence Budget and Needs  Process and Procedures  Doing Business  Future Opportunities  Guidelines for Doing Business with Indian Defence Sector Tech Synergy

Indian Defence Industry- Some Facts  India is one of the largest military spenders. India emerges as one of the biggest markets in the world for defence and aerospace products and the topmost importers.  Nearly 70% of Indian military hardware is imported. Indian exports are a modest US $75mn annually.  India has 8 Defence Public Sector Undertakings and 40 Ordnance Factories which account for almost total indigenous production of military goods.  The Defence industry has been opened for Private Sector. Tech Synergy

Indian Defence Industry- Some Facts  Defence budget has been increasing at a steady rate of more than 8%. It spends around 2.4% of GDP. Likely to increase as Indian economy is growing at over 7.5 % annually.  The capital head allocation to cater for modernisation and new equipment acquisition plans. The major portion of Indian defence budget (Approx 43-44%) has been earmarked for capital acquisition amounting to more than $10 billion during the current FY.  $ 100 billions to be spent in next 5 years for Indian Defence and Homeland security. Tech Synergy

Indian Defence Budget 36,836 40,000 35,500 26,484 30,000 24,090 21,497 in Rs million 20,000 10,000 0 2006-07 2007-08 2008-09 2009-10 2010-11 Tech Synergy

Indian Defence Industry  Increased focus by Government 56.31 60 48.28 50 of India on allocation to defence 41.40 40 35.50 in $ billion sector in India over years 30 20 10 0 2009-10 2011-12 2013-14 2015-16  It is expected to grow at 7 to 8 Revenue & Capital Expenditure 40 percent annually over the next Revenue 35 Expenditure five years 30 Capital Expenditure 25 21.75 in$ Billion 20 14.91 12.10 15 12.39 10 13.75 11.57 5 9.39 8.71 0 2006-07 2007-08 2008-09 2009-10 Tech Synergy

India: Market Spread  Currently, about 70% of Capital Defence Market Growth: 2008-2013 ($ Billion) procurements are from foreign 200 170 2008 150 suppliers and balance 30% is sourced 150 2013 from Indigenous sources. 100 45 45 25 50 15 13 10  The cumulative value of the India 0 US China India UK defence procurement for the next 5 years would be approximately US$ 45 Anticipated Defence Expenditure 2013 Bn, which makes it one of the most C4ISR 5% attractive markets in the world Other  Main suppliers of military equipment to 25% Air 30% India include Russia, Israel, France, Land 15% Germany, other European Union R&D Naval 10% countries, United States of America, 15% South Africa etc Tech Synergy

Market Growth: Indian Defence Industry  Modernization of the Indian Armed Forces is considered to be lagging behind by 10 years. The current profile of equipment held by Indian Armed Forces is:  State-of-the-art: 15% vs. required 30%  Mature: 35% vs. desirable 40%  Obsolescent: 50% vs. acceptable 30% It is expected that India will spend about US$ 100 billion during the 11 th five-year plan (2007-2012) Tech Synergy

Procurement - Planning Process DM’S Operational Directive 15 Years Long Term Integrated Perspective Plan Headquarters Integrated Defence Staff (IDS) 5 Years Defence Plans In consultation With the Service 5 Years Services Capital (New) Headquarters Acquisition Plan Annual Acquisition Plan Tech Synergy

Capital Acquisitions Categorization Buy & Make Buy Buy & Make Make Indian Purchase from High Tech foreign vendor RFP to be issued complex Buy Global Buy Indian followed by only to Indian indigenous licensed/indigeno vendors systems us production Indian vendors Foreign & Indian with 30% vendors indigenous content Tech Synergy

Buy Global  Outright purchase from OEM  Foreign as well as Indian vendor  Normally for one time procurement Buy & Make  Purchase from a foreign vendor  Followed by licensed production/indigenous manufacture in the country  Private sector can participate • Buy & Make (Indian) • Def Production Policy • Indian Company • 50% indigenous contents Tech Synergy

Short listing of vendors…  RFP only to OEM, authorised vendors and Government sponsored export agencies.  Vendor must possess proven technical competence of the level sought & have credible past track record. In TOT cases, ability to transfer requisite technology for licenced production is essential.  Export policies of vendor’s country with respect to high-tech items need to be ascertained, especially for TOT.  Issuance of RFP is an expression of confidence in the capability of the vendor. Once RFP is issued, no vendor can be eliminated summarily for suspect competence. Tech Synergy

Short listing of vendors…  RFP issued by Technical Managers after vetting by all concerned including production agency (for TOT). AON lapses if RFP not issued within two years.  TOT may be negotiated either with purchase package or as a follow up later-on, but availability of TOT would be a pre-condition. RFP to include trial methodology.  No addition to vendors is permitted once RFP issued. Single vendor RFP only with permission of DAC.  Single stage two-bid system is followed. Technical and commercial proposals are submitted in separate sealed envelopes, to be valid for 18 months. Maximum extension of time for submission up to 8 weeks – 4 by DG Acquisition and further 4 by Defence Minister.  Technical proposals are opened by Technical Managers while commercial proposals are kept sealed. Tech Synergy

Defence Technologies India Needs  Command and Control Architecture  Digital technology is being built into aircraft, tanks, artillery and individual soldier systems with the intention of providing commanders with “situational awareness” –an instantaneous and complete picture of battlefield  Area Missile Defence and Remote Warfare  Platform with stealth technology carbons composite and fibre  Technologies to enhance survivability, awareness connectivity and war fighting capability of the soldier  Electronic warfare, direction finding and deception technologies  Space technology to exploit applications of real time meteorology, navigation, communication surveillance, weapon guidance, cartography, synchronization.  High speed data processing  Nano technology  Cryptography and crypto analysis  Artificial Intelligence and Robotics Tech Synergy

Defence Technologies India Needs  Precision Guided Missions (PGMs)  Cruise Missiles-guided by GPS  Tactical Missile System  Sensor Fuzed weapons and joint stand off weapons carrying sub munitions  Low thermal and ‘Acrostic Signatures’ than its predecessor.  Battle Space Awareness:  Sensors in satellites, manned aircraft or UAVs  GPS satellite navigation Network and Air Borne Warning and Control System (AWACS)  UAVs for strategic roles, medium attitude long endurance (MALG) and low altitude UAVs  Night vision devices Tech Synergy

Defence Technologies India Needs  Thermal Imaging & Image Intensification.  Sensors / Detectors / Radars.  Trajectory Correction System /Missile Guidance.  Advanced Rocket Technology.  Active Tank Protection Systems.  Metallurgy / Forging Techniques for Guns.  Automotive Technologies.  Surveillance, Communications and Navigation Technologies.  Miniaturization / Nano Technology.  Networking Technologies for Seam Less Integration.  System Simulators. Tech Synergy

Programme Management Home Land Security  Ministry of Home Affairs is responsible for India’s internal security  Law and order is a state subject  Number of central police forces under it for special tasks and to supplement states’ resources  The 11/26 attack on Mumbai in November 2008, caused an approximate loss of over USD 800 mn to the financial capital of India  15 terrorist attacks in India in the last two years  Government has a modernisation plan for 6 Central Police Forces with an outlay of $ 900 mn up to 2010 to counter the asymmetric threat Tech Synergy

Market Opportunities  Putting a number of pending procurements onto the fast track option.  A $ 10 bn Homeland Security market by 2016.  Indian Navy and Coast Guard $ 4.5 Billions  Sea Port Security $ 0.5 Billions  A $3.2 bn market for Airport security by 2016.  Special Events $ 1 Billions  Sizable expansion of the Indian Coast Guard and the Indian Navy by 2012  Weapons and protection systems, both for individuals and vehicle such as –100000 Auto Carbines to replace 303/SLR rifles INRs 5000 crore ( $1.250 bns) –100000 Level III Bullet- Proof Jacket INR Rs 300 crore ($ 75 mns) –100000 Kevlar Helmets INR 100 crore ( $ 25 mns) Tech Synergy