India Defence Market Potential & Challanges

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India defence equipment market

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India Defence Market Potential & Challanges

  1. 1.  The current defence market in India presents immense potential for defence equipment manufacturer’s  Post 26/11 Mumbai terror attacks the Government has initiated massive revamp of security infrastructure/ arrangements of the country  Defence allocation for the year 2009-10 has been increased by 35% over the previous year to US$ 28.34 billion  Allocation for modernisation of police forces has been doubled to US$ 16 million
  2. 2.  Through the Defence Procurement Policy 2006, reviewed on 2008, the Government is trying to bring transparency to the process of procurement  Capital acquisitions are done either in ‘Buy’ or in ‘Buy & Make’ or in ‘Make‘ category
  3. 3.  Most of the procurements are done under a 15 year Long Term Integrated Perspective Plan that is further narrowed down to 5 years and annual acquisition plans
  4. 4.  Most of the procurements are done under a 15 year Long Term Integrated Perspective Plan that is further narrowed down to 5 years and annual acquisition plans
  5. 5.  Procurement under the LTIPP done through ‘Single Stage-Two Bid system.  The evaluation of bids is done in three stages: Technical, Field and Staff Evaluation.  Evaluations take a lot of time (at times as long as one and half years) because of the involvement of numerous agencies  Field evaluations need to be done in varied geographic and climatic conditions of the country to ensure their sustainability and effectiveness
  6. 6.  Of late the Government has been vocal about speeding up the procurement process laid down by the DPP by removing the hurdles and bottlenecks and bring transparency to the process  But that remains to be a reality due to the excessive time required for evaluation  Involvement of numerous players in the decision making at the stages of selection, testing and negotiation. This on one hand reduces objectivity of the process and on the other creates space for ‘red-tape’ making the process complex and unpredictable  The vendors can know Government’s procurement plans either when Ministry of Defence issues a Request for Proposal (RFP), or certain indications are given at the time of Request for Information (RFI) at the start of the process  In the process of liberalisation of defence procurement, India has allowed use of Indian representatives or “agents” in helping the foreign companies with their bid  Foreign vendors to lobby hard in the corridors of power in the Government

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