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Privatisation Thrust and Geopolitical Situation Transforming the Indian Defence Market

·2-min read

Defence Public Sector Undertakings (DPSUs) that have not delivered as per expectation have traditionally dominated the Indian defence market. As a result, India imports an estimated 70% of its defence needs.

New York, May 25, 2021 (GLOBE NEWSWIRE) -- announces the release of the report "Privatisation Thrust and Geopolitical Situation Transforming the Indian Defence Market" -

The acquisition cycle has also been long blamed for being inefficient resulting in delayed or cancelled contracts.Consequently, the Indian defence forces suffer from an inventory shortfall and operate legacy equipment.

While the call for defence reforms has been a long-stated need, the effect of the faceoff with China and the COVID-19 pandemic’s economic impact have now seen the government change its stance. The Defence Acquisition Procedure 2020, along with Atmanirbhar reforms, aims to increase private sector participation with a view to hold DPSUs to greater accountability. The Indian Defence market represents accessible cumulative capital and revenue acquisition opportunity of $306.95 billion from 2021 to 2030. India aims to increase its defence production output to $25 billion, including exports of $5 billion. Simultaneously, the FY 2021-2022 defence budget’s capital allocation was hiked by 18.7% to provide for modernisation. The Indian defence market is at the cusp of a revolution, with the introduction of policy changes that promise to reduce program delays and speed up acquisition. Provisions such as allowing leasing of equipment and waiver of offset requirements in government-to-government deals also hold promise in the upcoming decade. The Ministry of Defence (MoD) has also set a target of doubling defence production and increasing defence exports by 5 times by 2025. To ensure that these goals are achieved, the MoD is pushing for enhancing private-sector participation to create a level-playing field and is also taking other steps such as corporatisation of Ordnance Factory Board. Successful implementation of the envisaged measures will have a long-lasting effect on the defence industry and the competitive landscape.
Author: Rohit Beri
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