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India’s high defense spending makes it an attractive destination for foreign direct investment (FDI)
The Indian aerospace and defense market presents an attractive and significant opportunity for domestic players and foreign companies across the defense supply chain. India has the third-largest armed forces in the world, and its defense budget is nearly 2% of its GDP. It is one of the largest importers of conventional defense equipment and spends about 40% of its total defense budget on capital acquisitions. The majority of the country’s defense requirements are met through imports.

Make in India initiative expected to bolster opportunities for the Indian companies looking to enter the defense sector
The Indian government aims to build a domestic industrial base by encouraging procurement of indigenously manufactured or developed technology and weapons systems, under its Make in India initiative. It has also revised the Defense Procurement Procedure (DPP). Original equipment manufacturers and their suppliers are expected to fulfil offset obligations and take advantage of India’s competitive advantages in manufacturing and information technology by setting up manufacturing facilities in the country. A large number of Indian private companies and publicly funded research laboratories are looking to enter the Indian defense sector.

Break-up of primary participants for the report has been given below:
- By company: Tier1 - 35%, Tier 2 - 45%, Tier 3 - 20%
- BY designation: C Level - 35%, Director Level - 25%, Others - 40%


Opportunities for domestic players to emerge as offset partners for the foreign players

The offset policies formulated by the Indian government are expected to offer various opportunities for the domestic private players. They are expected to help develop the required ecosystem for major private players to emerge. This has led to various opportunities which are anticipated to spur the growth of the indigenous defense industry, including the private sector.
The domestic companies, specially medium, small, and micro enterprises (MSMEs) are expected to be a part of the global supply chain of major defense companies.

The various companies profiled in this report include Ashok Leyland, Astra Microwave Products, Bharat Forge, Larsen&Toubro, Mahindra & Mahindra, Reliance Infrastructure, Reliance Industries, Rolta India, Solar Industries, TATA Group, Walchandnagar Industries, Bharat Dynamics, Bharat Earth Movers, Bharat Electronics, Cochin Shipyard, Garden Reach Shipbuilding & Engineers, Hindustan Aeronautics, Hindustan Shipyard, Mazagaon Dock Shipyard, and Zen Technologies.

Reasons to buy the report:
From an insight perspective, this research report has focused on various levels of analysis—inventory assessment, mapping the technological capability roadmap as envisaged by the Indian government, market structure analysis of top players, and company profiles, which together comprise and discuss the basic views on the competitive landscape and opportunities in the Indian defense sector.

The report provides insights on the following pointers:

- Market Penetration: Comprehensive information on weapons systems and components offered by the top players in the Indian defense sector
- Product Development/Innovation: Insights related to the current inventory held by the Indian armed forces and expected procurements

- Market Development: Information about the changing market dynamics due to relaxing of FDI norms

Table Of Contents

FDI Opportunities in the Indian Defense Sector, Policy Overview, Technological Capability Assessment, Inventory Gap Assessment, Key Indian Companies - Capabilities, Tie-ups and Profiles
TABLE OF CONTENTS

1 POLICY OVERVIEW 9
1.1 INTRODUCTION 9
1.2 INDIAN DEFENSE SUPPLY CHAIN 10
1.3 DEFENSE PROCUREMENT POLICY (DPP)-2016 11
1.4 DPP: PROCUREMENT CATEGORIZATION AND SANCTIONING AUTHORITIES 12
1.5 CURRENT DEFENSE PROCUREMENT PROCESS 14
1.6 PROCESS OF ISSUANCE OF REQUEST FOR PROPOSAL (RFP) 15
1.7 DEFENSE EQUIPMENT PROCUREMENT: TIMELINE AND BIDDING PROCESS 15
1.8 DEFENSE OFFSET POLICY OBLIGATIONS 17
1.9 REGULATORY MECHANISM: TAXATION POLICY, PROTECTION OF INTELLECTUAL PROPERTY, AND INDUSTRIAL LICENSING 18
1.9.1 INDUSTRIAL LICENSING POLICY 20
2 TECHNOLOGICAL CAPABILITY ASSESSMENT, BY PLATFORM 21
2.1 AIRBORNE SYSTEMS 21
2.1.1 CURRENT CAPABILITY 21
2.1.2 CAPABILITY ROADMAP: TECHNOLOGY FOCUS OF THE INDIAN GOVERNMENT AND KEY RFIS/RFPS ISSUED 22
2.2 NAVAL SYSTEMS 23
2.2.1 CURRENT CAPABILITY 23
2.2.2 CAPABILITY ROADMAP: TECHNOLOGY FOCUS OF THE INDIAN GOVERNMENT AND KEY RFIS/RFPS ISSUED 24
2.3 LAND SYSTEMS 25
2.3.1 CAPABILITY ROADMAP 25
2.3.2 CAPABILITY ROADMAP: TECHNOLOGY FOCUS OF THE INDIAN GOVERNMENT AND KEY RFIS/RFPS ISSUED 26
3 INVENTORY GAP ASSESSMENT, BY PLATFORM 28
3.1 AIRBORNE SYSTEMS: INVENTORY GAP ASSESSMENT 28
3.1.1 COMBAT and TRAINER 28
3.1.1.1 Current scenario 28
3.1.1.2 Key focus areas 28
3.1.2 ROTARY 29
3.1.2.1 Current scenario 29
3.1.2.2 Key focus area 29
3.1.3 SUPPORT PLATFORMS 30
3.1.3.1 Current scenario 30
3.1.3.2 Key focus areas 30
3.1.4 KEY DEVELOPMENTS (2015) 31

3.2 NAVAL SYSTEMS 31
3.2.1 SUBMARINES 32
3.2.1.1 Current scenario 32
3.2.1.2 Key focus areas 32
3.2.2 SURFACE COMBATANTS 33
3.2.2.1 Current scenario 33
3.2.2.2 Key focus areas 33
3.2.3 SUPPORT PLATFORMS 34
3.2.3.1 Current scenario 34
3.2.3.2 Key focus areas 34
3.2.4 KEY DEVELOPMENTS (2015) 35
3.3 LAND SYSTEMS 36
3.3.1 ARTILLERY 37
3.3.1.1 Current scenario 37
3.3.1.2 Key focus areas 37
3.3.2 MISSILES 38
3.3.2.1 Current scenario 38
3.3.2.2 Key focus areas 38
3.3.3 FIGHTING VEHICLES 38
3.3.3.1 Current scenario 38
3.3.3.2 Key focus areas 38
3.3.4 INFANTRY SYSTEMS 38
3.3.4.1 Current scenario 38
3.3.4.2 Key focus areas 38
3.3.5 KEY DEVELOPMENTS (2015) 39
4 KEY INDIAN COMPANIES: CAPABILITIES and TIE-UPS 40
5 COMPANY PROFILES 44
5.1 KEY PRIVATE DEFENSE EQUIPMENT MANUFACTURERS 44
5.1.1 ASHOK LEYLAND 44
5.1.2 ASTRA MICROWAVE PRODUCTS LIMITED 46
5.1.3 BHARAT FORGE LIMITED 48
5.1.4 LARSENandTOUBRO LIMITED 49
5.1.5 MAHINDRAandMAHINDRA LIMITED 50
5.1.6 PIPAVAV DEFENCE AND OFFSHORE ENGINEERING COMPANY LIMITED 51
5.1.7 RELIANCE INFRASTRUCTURE LIMITED 53
5.1.8 RELIANCE INDUSTRIES LIMITED 54
5.1.9 ROLTA INDIA LIMITED 55
5.1.10 SOLAR INDUSTRIES INDIA LIMITED 56
5.1.11 TATA GROUP 57
5.1.12 WALCHANDNAGAR INDUSTRIES 59
5.2 KEY GOVERNMENT OWNED DEFENSE EQUIPMENT MANUFACTURERS 60
5.2.1 BHARAT DYNAMICS LIMITED 60
5.2.2 BHARAT EARTH MOVERS LIMITED 62
5.2.3 BHARAT ELECTRONICS LIMITED 64
5.2.4 COCHIN SHIPYARD LIMITED 65
5.2.5 GARDEN REACH SHIPBUILDING and ENGINEERS LIMITED 66
5.2.6 HINDUSTAN AERONAUTICS LIMITED 67
5.2.7 HINDUSTAN SHIPYARD LIMITED 69
5.2.8 MAZAGON DOCK SHIPBUILDERS LIMITED 70
5.3 MICRO SMALL AND MEDIUM ENTERPRISES (MSME) 72
5.3.1 ALPHA DESIGN TECHNOLOGIES PRIVATE LIMITED 72
5.3.2 PRECISION ELECTRONICS LIMITED 74
5.3.3 ZEN TECHNOLOGIES LIMITED 75
6 APPENDIX 76
6.1 QUESTIONNAIRE FOR PRIMARY INTERVIEWS 76
6.2 AVAILABLE CUSTOMIZATIONS 77
6.2.1 DEFENSE PROCUREMENT POLICY (DPP)-2016 ANALYSIS 77
6.2.2 COMPANY INFORMATION 77
6.2.2.1 Detailed analysis and profiling of additional players (Up to 5). 77
6.3 RELATED REPORTS 78


LIST OF TABLES

TABLE 1 TAX REGIME 19
TABLE 2 FIGHTER AIRCRAFT: CURRENT CAPABILITY 21
TABLE 3 SUPPORT PLATFORMS: CURRENT CAPABILITY 22
TABLE 4 ROTARY AIRCRAFT: CURRENT CAPABILITY 22
TABLE 5 KEY TECHNOLOGIES IDENTIFIED FOR CAPABILITY ENHANCEMENT BY THE INDIAN GOVERNMENT 22
TABLE 6 LIST OF KEY REQUEST FOR INFORMATION (RFI) ISSUED 23
TABLE 7 LIST OF KEY REQUEST FOR PROPOSALS (RFPS) ISSUED 23
TABLE 8 SURFACE COMBATANTS: CURRENT CAPABILITY 23
TABLE 9 SUBMARINES: CURRENT CAPABILITY 24
TABLE 10 SUPPORT PLATFORMS: CURRENT CAPABILITY 24
TABLE 11 KEY TECHNOLOGIES IDENTIFIED FOR CAPABILITY ENHANCEMENT BY THE INDIAN GOVERNMENT 24
TABLE 12 LIST OF KEY REQUEST FOR INFORMATION (RFI) ISSUED 25
TABLE 13 LIST OF KEY REQUEST FOR PROPOSALS (RFPS) ISSUED 25
TABLE 14 ARTILLERY: CURRENT CAPABILITY 25
TABLE 15 MISSILES: CURRENT CAPABILITY 26
TABLE 16 FIGHTING VEHICLES: CURRENT CAPABILITY 26
TABLE 17 INFANTRY SYSTEMS: CURRENT CAPABILITY 26
TABLE 18 KEY TECHNOLOGIES IDENTIFIED FOR CAPABILITY ENHANCEMENT BY THE INDIAN GOVERNMENT 26
TABLE 19 LIST OF KEY REQUEST FOR INFORMATION (RFI) ISSUED 27
TABLE 20 LIST OF KEY REQUEST FOR PROPOSALS (RFPS) ISSUED 27
TABLE 21 KEY PRIVATE SECTOR PLAYERS : CAPABILITY 40
TABLE 22 KEY PUBLIC SECTOR PLAYERS: CAPABILITY 42
TABLE 23 KEY INDUSTRY PARTICIPANTS, BY PLATFORM 43


LIST OF FIGURES

FIGURE 1 STATE OF INVENTORY HELD BY INDIA (2015) 9
FIGURE 2 FINANCE COMMISSION'S PROJECTION FOR DEFENSE REVENUE EXPENDITURE (2014-2019) 10
FIGURE 3 DEFENSE SUPPLY CHAIN 10
FIGURE 4 DPP 2016- INTERIM GUIDELINES 11
FIGURE 5 EVOLUTION OF DPP (2002-2013) 12
FIGURE 6 PROCUREMENT CATEGORIZATION 12
FIGURE 7 PROCESS FOR PROCUREMENT UNDER ‘BUY', ‘BUY AND MAKE WITH TOT', AND BUY and MAKE (INDIAN) CATEGORIES 13
FIGURE 8 ACQUISITION PROCESS UNDER ‘MAKE' CATEGORY 13
FIGURE 9 KEY DECISION MAKERS IN THE PROCUREMENT PROCESS 14
FIGURE 10 RFPS ARE ISSUED BY THE INDIAN MOD 15
FIGURE 11 OVERVIEW OF THE DEFENSE EQUIPMENT PROCUREMENT PROCESS 15
FIGURE 12 EVALUATION AND SELECTION OF BIDS DURING DPP 16
FIGURE 13 REGISTRATION GUIDELINES FOR VENDORS 17
FIGURE 14 AVENUES TO DISCHARGE OFFSET OBLIGATIONS 18
FIGURE 15 PROTECTION OF INTELLECTUAL PROPERTY 20
FIGURE 16 PROJECTED AIRFORCE CAPITAL EXPENDITURE OUTLAY (2014-2024) 28
FIGURE 17 COMBAT/TRAINER AIRCRAFT: INVENTORY ASSESSMENT (2015) 29
FIGURE 18 ROTARY AIRCRAFT: INVENTORY ASSESSMENT (2015) 30
FIGURE 19 SUPPORT PLATFORMS: INVENTORY ASSESSMENT (2015) 31
FIGURE 20 PROJECTED NAVY CAPITAL EXPENDITURE OUTLAY (2014-2024) 32
FIGURE 21 SUBMARINES: INVENTORY ASSESSMENT (2015) 33
FIGURE 22 SURFACE COMBATANTS: INVENTORY ASSESSMENT (2015) 34
FIGURE 23 SUPPORT PLATFORMS: INVENTORY ASSESSMENT (2015) 35
FIGURE 24 PROJECTED LAND SYSTEMS CAPITAL EXPENDITURE OUTLAY (2014-2024) 36
FIGURE 25 LAND SYSTEMS: INVENTORY ASSESSMENT (2015) 36
FIGURE 26 ARTILLERY: INVENTORY ASSESSMENT (2015) 37
FIGURE 27 PRODUCT OFFERINGS 44
FIGURE 28 ASHOK LEYLAND: SWOT ANALYSIS 45
FIGURE 29 PRODUCT OFFERINGS 46
FIGURE 30 ASTRA MICROWAVE PRODUCTS LIMITED: SWOT ANALYSIS 47
FIGURE 31 PRODUCT OFFERINGS 48
FIGURE 32 BHARAT FORGE LIMITED: SWOT ANALYSIS 48
FIGURE 33 PRODUCT OFFERINGS 49
FIGURE 34 LARSENandTOUBRO LIMITED: SWOT ANALYSIS 49
FIGURE 35 PRODUCT OFFERINGS 50
FIGURE 36 MAHINDRA and MAHINDRA: SWOT ANALYSIS 50
FIGURE 37 PRODUCT OFFERINGS 51
FIGURE 38 PIPAVAV DEFENCE AND OFFSHORE ENGINEERING COMPANY LIMITED: SWOT ANALYSIS: 52
FIGURE 39 PRODUCT OFFERINGS 53
FIGURE 40 RELIANCE INFRASTRUCTURE LIMITED: SWOT ANALYSIS 53
FIGURE 41 RELIANCE INDUSTRIES LIMITED: SWOT ANALYSIS 54
FIGURE 42 PRODUCT OFFERINGS 55
FIGURE 43 ROLTA INDIA LIMITED: SWOT ANALYSIS: 55
FIGURE 44 PRODUCT OFFERINGS 56
FIGURE 45 SOLAR INDUSTRIES INDIA LIMITED: SWOT ANALYSIS 56
FIGURE 46 PRODUCT OFFERINGS 57
FIGURE 47 TATA GROUP: SWOT ANALYSIS 58
FIGURE 48 PRODUCT OFFERINGS 59
FIGURE 49 WALCHANDNAGAR INDUSTRIES: SWOT ANALYSIS 59
FIGURE 50 PRODUCT OFFERINGS 60
FIGURE 51 BHARAT DYNAMICS LIMITED: SWOT ANALYSIS 61
FIGURE 52 PRODUCT OFFERINGS 62
FIGURE 53 BHARAT EARTH MOVERS LIMITED: SWOT ANALYSIS 63
FIGURE 54 PRODUCT OFFERINGS 64
FIGURE 55 BHARAT ELECTRONICS LIMITED: SWOT ANALYSIS 64
FIGURE 56 PRODUCT OFFERINGS 65
FIGURE 57 COCHIN SHIPYARD LIMITED: SWOT ANALYSIS 65
FIGURE 58 PRODUCT OFFERINGS 66
FIGURE 59 GARDEN REACH SHIPBUILDING and ENGINEERS LIMITED: SWOT ANALYSIS 66
FIGURE 60 PRODUCT OFFERINGS 67
FIGURE 61 HINDUSTAN AERONAUTICS LIMITED: SWOT ANLAYSIS 68
FIGURE 62 PRODUCT OFFERINGS 69
FIGURE 63 HINDUSTAN SHIPYARD LIMITED: SWOT ANALYSIS 69
FIGURE 64 PRODUCT OFFERINGS 70
FIGURE 65 MAZAGON DOCK SHIPBUILDERS LIMTED: SWOT ANALYSIS 71
FIGURE 66 PRODUCT OFFERINGS 72
FIGURE 67 ALPHA DESIGN TECHNOLOGIES PRIVATE LIMITED: SWOT ANALYSIS 73
FIGURE 68 PRODUCT OFFERINGS 74
FIGURE 69 PRECISION ELECTRONICS LIMITED: SWOT ANALYSIS: 74
FIGURE 70 PRODUCT OFFERINGS 75
FIGURE 71 ZEN TECHNOLOGIES LIMITED: SWOT ANALYSIS 75

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