Procurement Programs - Under Secretary of Defense (Comptroller)
Defense procurement in India
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May 24, 2013 Procurement Consulting – Brickwork Sourcing Defense Procurement in India Defense Procurement in India Brickwork India (Confidential) www.brickworksourcing.com
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This presentation gives insights into the Indian defence sector and its workings. The increased role played by the defense offset policy and FDIs are elaborated. The latest amendment in the Indian defense offset policy and its implications on development of local sourcing and SMEs have been examined.
Transcript of Defense procurement in India
May 24, 2013Procurement Consulting – Brickwork Sourcing
Defense Procurement in IndiaDefense Procurement in India
Brickwork India (Confidential)
www.brickworksourcing.comwww.brickworksourcing.com
India has become an integral part of the global supply chain of some of the biggest defense component manufacturers in the world.
India is expected to spend 100 billion USD over the next decade to modernize its armed forces, particularly on capital procurement of new weapons and other systems.
The Indian defense budget has been increasing over the years and for FY 2013-14 it has been hiked to 37 billion USD, this amounts to an increase of 5.3 percent from the previous year.
Defense deals by the Indian government over the last three financial years, starting from 2009-10, have seen nearly 40 billion USD being spent.
One recent event which highlighted the growth of the Indian defense sector was Aero India 2013 which was touted as the biggest in Asia with 607 defense companies and 78 overseas delegations in attendance.
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Current Scenario
The latest Indian defense offset policy amendment in 2012 stipulates that any deal for defense equipment to be supplied by a foreign company, worth over 55 million USD, would attract the offset clause under which 30 to 50 percent of the contract costs would have to be ploughed back into India.
The latest defense offset amendment aims to promote and develop local defense sourcing; translating into a total offset opportunity for the native commercial segment valued at 10 to15 billion USD.
Offset contracts valued at more than 4.5 to 5 billion USD have been signed between Indian companies and foreign partners since 2005.
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Defence Offset Policy
To promote investments in the Indian defense industry and collaborations with Indian companies, the defense offset Policy permits up to 49% foreign direct investment (FDI) by foreign defense companies.
FDI has led to the development of a 10 billion USD native defense industry with product and as well as component manufacturing capabilities. There have been more than 40 noteworthy joint ventures and partnerships between international firms and major Indian defense players such as Tata, Mahindra & Mahindra and L&T. Technology collaborations in Indian defense are also on the rise.
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Foreign Direct Investment
Market Potential
US aerospace major Boeing, estimates to strike defence deals of approximately 20 billion USD in India.
Although the hike in the defense budget has been moderate for the FY 2013-14, there is enough evidence to suggest that there is bound to be substantial growth on account of the Defense Offset Policy and the increase in FDI.
Brickwork Sourcing provides end-to-end procurement research and consulting services to clients from all major continents. It specializes in assisting clients with low cost country sourcing as well as Indian market entry assessments.
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“The information contained in this document that includes text, graphics and links, are provided on an “as-is”, "with all faults" and "as available" basis and are without warranty of any kind. While Brickwork relies on sources that are believed to be reliable, it cannot rule out errors in judgment or application. The document is intended for “information” and “general guidance” purposes only.” Investment decisions and/or other decisions based on the conclusions and potential strategies mentioned in the document are not necessarily endorsed by the Brickwork management.”
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About Brickwork Sourcing
Brickwork is the pioneer of the Virtual Office business. We provide virtual support for businesses across the globe. Our well informed Remote Sourcing Analysts (RSAs) can provide support at any or all stages of your sourcing lifecycle. Your Virtual Sourcing Office can be a large team of analysts supporting large companies with established procurement processes or a one-man-show to function as your entire procurement office.
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THANK YOUTHANK YOUContact:[email protected] Sanjeeth HegdeIndia: +91 (80) - 4040 – 9999 (218 Ext)
13 April 2023
www.brickworksourcing.comwww.brickworksourcing.com
