Image Courtesy : World Armies
Indian defense industry in the last decade has brought in an enormous change with their approach toward investments in defense systems as they were either becoming obsolete or not improving the standard of achieving the precision intended. The Indian defense market has offered numerous opportunities for domestic as well as foreign defense systems manufacturers. Being one of the largest defense equipment market in the world, Indian defense industry is expected to allocate a large chunks of every annual budget that will amount up to US $120 billion till 2018. The next few years are going to be quite crucial as the focus is on homeland security, intelligence, cyber and military security systems because of an increasing geopolitical threats from neighboring nations, along with threats of terrorism and internal security issues.
The biggest driver to procure advanced defense systems, and formation & implementation of defense industrialization in India is the aging military weaponry and the strong economic growth. After the announcement of Defense Procurement Policy (2013), there appears to be a positive change in the backing for indigenous defense industry and deals with private sector are steadily seeing the light of the day. The defense procurement policy is largely categorized to promote and prefer increasing order in purchasing and manufacturing of Indian hardware and technology and limit global influence on defense systems. The aim is to advance with the technology and bring in innovation that will give opportunities for many new entrants. This move will boost local production as domestic firms will see a great deal of admiration and acceptance over global competitors.
The private sector, however, has large degree of motivation in terms of large market size and advantages to overcome hurdles of any kind, but there are limitations and barriers of government policies that will provide and aims to provide equal opportunities for domestic and private organizations catering defense systems. The plans of incentivizing joint ventures and purchasing Indian, is a much desired end state but that initiative has a long aging and maturing process as Indian defense lacks advanced technological capabilities, such as metallurgy, high-end missile sensors, long-range tracking radars (LRTRs), artillery combat command and control system (ACCCS), aerostats, electronic warfare systems and equipment and complex avionics. The Indian defense market for cutting-edge technology providers is consists of very few manufacturers and due to the number being small, the prices cannot be adjusted to the changing market conditions.
The Indian defense sector has been particularly sensitive to FDI as The Ministry of Defense has been against the idea of raised investment of foreign organizations due to the increasing concerns on matter such as transfer of technical know-how, and stopping of production during wars, but there has been a silver lining in the improvements of allowance in the multi-billion dollar industry. Indian defense systems, however, are growing amid all the barriers and with inclusions of Sukhois, MiGs, INS Vikranths and INS Vishals, and enhancements in every missile and defense systems in Indian Air Force, Indian Navy and Indian Army, the growth in domestic defense industry is coming of age and the developments and innovations are able to compete with any western technology and capabilities.