Sector Overview & FICCI’s Engagement

Sector Overview

India has the third largest Army, the fourth largest Air force and the seventh largest Navy in the world. India is fifth on the list of the world’s biggest military spenders. Its military expenditure grew to $55.9 billion last year. India’s military expenditure increased by around 8.5 percent in 2016. (Source – SIPRI)

The Geopolitical realities has pushed India’s Defence budget and the spends upwards year on year. The defence sector thus has become an important and a growth sector for India. Although, India is one of the world’s top defence importers, the Government of India has made it a priority to create a robust defence industrial base under its ‘Make in India’ initiative. A self-reliant Indian Aerospace and Defence Sector is also crucial for the success of ‘Make in India’ initiative. The “Make in India” initiative has clearly been the guiding principles for changes in Defence Procurement Policy (DPP) and it reflects very clearly in the DPP 2016 released last year. Key highlights of DPP 2016 are:

  • Introduction of new procurement category “Buy (IDDM) – Indigenously Designed, Developed and Manufactured”. Buy (Global) has been given the last priority
  • Make Procedure has been further expanded to Make – I (Government Funded), Make – II (Industry Funded) and Make – III (MSME Funded)
  • Introduction of new policy on “Strategic Partnership Model”
    • Promotes private sector participation in the defence sector
    • Provides opportunity for private sector to participate in big ticket procurements
    • Substantial number of tier 1, tier 2, tier 3 companies and MSMEs will engage at different levels of manufacturing thereby creating a vibrant defence industrial base
  • India has strong defence cooperation with countries like Russia, USA, Israel, France, UK, Germany. With a modernisation budget close to $11 billion allotted for the armed forces in the defence budget this year and a conducive policy environment there is a level playing field for public sector, private sector and foreign players all to thrive in a competitive format.

    FICCI’s Engagement

    • Capturing the trend of Indian as well as global defence related policies from time to time
    • Interfacing actively with the Ministry of Defence, DRDO and the armed services (Army, Navy and Air force) on concerns and participation of the industry
    • Suggesting policy recommendations to the government for reform of defence sector and modernization of armed forces
    • Regular interaction with government, users (i.e. armed forces) as well as private sector organizations involved in defence R&D, production and trade
    • Comparative study of defence policies of different nations and that of India
    • Providing timely information and productive suggestions to the members and other stake holders
    • Identifying new issues and accordingly expand the desk’s scope of work to meet the changing security environment from time to time
    • Conducting regular defence related business networking functions, seminars and conferences where all major players participate to discuss on the emerging issues, share their views, find out innovative solutions to any existing or emerging challenges
    • Interaction with the visiting delegations
    • Participating in international shows in defence sector and mounting Business Delegations
    • Participate and contribute in the High Technology Cooperation Group (HTCG) and Defence Procurement & Production Group (DPPG) forums with the US Government and Industry