The presentations takes you through the various topics covered such as History Overview of defence industrialization phases, Challenges faced by HAL, Competition in the market, Roles of Private sectors, Insights of R&D, Customer’s/HAL’s Turmoil and Market survey.

2. CONTENT
• History
• Overview
• Challenges faced by HAL
• Competition
• Role of Private sectors
• Insights of R&D
• Customer’s/HAL’s Turmoil
• Market survey
• References

3. HISTORY
• Defence Industrialisation Phases:
1. From independence till the mid-1960s
2. From mid-1960 till the mid-1980s
3. From mid-1980 till early 2000s
4. From mid -2000 to late 2014
5. From mid 2014 to till date

4. PHASE 1: From independence till the mid-1960s
• The First Industrial Policy Resolution was adopted in 1948.
• The self sufficiancy model in 1948 report was Influenced by the British scientist
“PMS Blackett” who was invited by PM Nehru to advice the government about
defence R&D requirement.
• He therefore recommended that the defence budget should be below 2% of GDP.
• Which was the norm throughout the 1950s & in early 1960’s before India went to
war with china in 1962.
Fig: GDP figures from 1950-2017

5. PHASE 2: Self-reliance is replaced with self-sufficiency
in defence production( 1960-80)
• The events of 1960’s, particularly the 1962 war with china & ino-pak war
of 1965 brought about a major change in India’s defence policy.
• The approach towards arms procurement policy & indiginisation of defence
production changed.
• Due to the US embargo after the Indo-pak war of 1965 & cold war politics,
India forged the close defence links with the soviet union.
 Mig 21 a/c signed in october 1962.
 By 1980, roughly 70% of military hardware was by soviet origin.
 The war with china also led to a significant expansion of the defence
industrial bases.
 Between 1962 to mid 1980’s 11 ODF were made.
 In this phase the more focus was on licence production rather than
then indeginised production.
 Other than mig 21, A number of other programms were taken up for
licence production like tanks, destroyers etc.

6. PHASE 3: Self-reliance through co-production(mid-
1980’s till early 2000)
• Begining with the mid-1980’s the government pumped up resources on
R&D to enable DRDO undertake high profile projects.
 IGMDP (PRITHVI, AKASH, TRISHUL, NAG, AGNI) Rs. 388.83 cr.
 In the same year the government sanctioned LCA for Rs. 560 cr.
 “When the indegenisation efforts where not adequate to meet the growing
forces demand” the government seeked for alternatives in the name of joint
ventures (JV).
Indo-Russia Brahmos programme in 1998
Two G to G agreements was signed for MTA & FGFA
Other defence hardware with Isreal

7. PHASE 4: Self reliance through private sector
participation(mid-2000s to late 2014)
• The approach towards self-reliance has taken a major turn since the early
2000’s when the govt. Decided to allow 100% participation of the private
sector in defence production.
• This however did not mean an easy access to defence contracts as MoD’d
DPP.
• DPPs have included a host of enabling provisions that include an offset
clause, two new procurement categories.
Make and buy and make (Indian)))
Under the “offset clause”, which was first announced in 2005,
forign companies winning MoD contracts worth Rs. 300cr or
more are required to plough back 30% of foreign exchange
component of contractual value to Indian defence enterprice.

8. PHASE 5: Self-Reliance through Make in India
Initiative( from 2014-till date)
• Make in India initative is not restricted to defence industry it
covers .
 25 diverse sectors.
 Larger econonomic plan to propel the share of manufacturing in GDP
to 25%(from 16%).
 Create 100 million additional jobs by 2022.
• Milestones of make in India.
 Ease of doing business
 Industrial licensing
 FDI cap
 Defence exports
 Level playing field b/w private and public sectors

9. OVERVIEW
Defence expenditure across the globe: Defence budget allocations:

10. • To credit this vast industrial
base, India is among the few
countries that has produced:
 Fourth-plus gen. Fighter a/c
 An aircraft carrier
 A nuclear submarine
 MBT
 ICBM for a range 5000km
• India is the world’s largest
importer of major weapons,
with a 15% global share
during 2010-2014. •
• The CAG in 2011 report to parliament had expressed its displeasure at
90% import dependency of HAL for raw material & BOI for production of
what is touted as indigenously designed & developed ALH.

11. CHALLENGES FACED BY HAL
“It was Pokhran-II nuclear test in May 1998 that delayed the Tejas project, as the U.S.,
Germany and other countries put an immediate embargo on import of about 50 critical
components for the aircraft,” said Dr. Verma. “Later we produced all these components
indigenously to make Tejas a fully indigenous fighter aircraft.”
Lockheed Martin kicked out the Indian engineers and shut down access to the flight
software we'd built for the Tejas, as soon as the US announced sanctions against India
for the Pokhran nuclear tests.
Talking to The Hindu, Dr. Verma recalled the initial hiccups in the ambitious project and
the reasons why it took so long — 33 years — for them to “Make in India.”
The design of Tejas needed approximately 290 components. “Altogether 700 engineers
from the DRDO, ADA, HAL, ISRO, NSSL and IIT were involved in the project. The
strength was later reduced to 400 due to “cost-cutting,” said Dr. Verma, under whom
200 engineers from the ADA worked day and night.

12. COMPETITION
ADVANCED TACTICAL
FIGHTER
Lockheed Martin F-22 Raptor Northrop/McDonnell Douglas YF-23
Lockheed Martin F-35 Boeing X-32
JOINT STRIKE FIGHTER
PENTAGON

13. ROLE OF PRIVATE SECTORS
• The reform in licensing issued b/w june 2014 & sept 2015, is an attemt to
codify & simplify the process of granting IL & to remove procedural
hurdles & other complexities in the process.
• Extended the validity of IL from the earlier 3 years to 18 years.
• The govt. has expedited the IL granting process in the first year itself by
granting 73 Ils in comparision to 56 given in the previous 3 years

14. • The human interface involved in filling up the licence application has also
been removed by putting it online.
• The reform in FDI cap was first announced in the modi govt.’s first budget
presented to parliament on july 2014.
 As per the Nov. 2015 notification, the FDI cap stands increased from
earlier 26% to 49% that includes FPI and FII.
“The private sectors long demanded a level playing field with the
public sector defence production units” which were long exempted
from paying central exise & custom duties on goods supplied to forces.
“In response, the govt. has withdrawn both exemptions on april 2015”
These notifications has also encouraged forign companies such as Boeing,
Airbus, Lockheed martin & BAE systems to actually explore the scope of
future investments India

15. • Make in India has also emphasised putting the private sector at the heart
of procurement process.
The modi govt’s first year itself saw the clearence of 39 acquisition proposals, of
which 32 proposals worth Rs 88,900cr. (96% of total value)

16. • Example:
 The trust factor with the private sector perhaps best amplified in
the govt’s recent decision to allow L&T to sign a licensing
agreement for (TOT) with DRDO for upgraded digital version of PTA,
lakshya.
 This is the first time that technology of high value product
developed by DRDO was given to private sector for license
production.
• The govt. also considered additional steps to deepen the private
sector’s participation in defence production:
In this regard the govt. Examined the report of dhirendra singh
committee which was set up to suggest ammendments to DPP-2013 &
formulate a policy frame work to facilitate “Make in India”
The report submitted in july 2015 contains 43 reccommendations.
The major recommendations pertain to strategic partners from
among the private sector companies which would manufacture big
projects.

17. INSIGHTS OF R&D
• This can be seen both in terms of input (expenditure on R&D) and
output (Patents , in house design/ development & technology
assimilation)
• Going by number of patents & copyright, which is by far the most
common indication of R&D performance, DPSUs and OF’s are way below
their peers.
• Of the 9 DPSU’s, 4 do not have even a single patent (or) copyright to
their credit.

18. • In comparision, the US based aerospace major boeing, claims over 1000
patents in a single programme 787 dreamliner.
• The french company thales spends 20% of its revenue on R&D compared
to 8% of BEL.

19. • HAL & BEL, which have dedicated R&D centers & spends 6-8% of their
turnover on R&D.
• The lack of in-house R&D in most of the enterprices makes them
perpetually dependent on others either DRDO (or) forign companies, for
technology for production.
EXAMPLES
• When HAL was a Co-developmental partner; for FGFA project the
contribution of HAL is belived to be just around 15-25%.
• The import content in HAL’s indigenously developed ALH dhruv is 90%
against 50% envisaged originally.
• The high import dependency in licence manufacturing is best amplified in
SU-30 MKI in HAL’s maximum indigenisation has achieved, so far is only
33%.

20. CUSTOMER’s TURMOIL
• IAF’s Cluster Of Diverse Squadrons
 3 squadrons of mig 29
 3 squadrons Mirage 2000
 5 squadrons of Jaguar planes
 2 squadrons of rafale
 12 squadrons of sukhoi
• The IAF says HAL’s inability to deliver critical trainer a/c like HTT 40
& HPT 32.
• The IAF is yet to decide the configuration for six LCA trainer a/c it is
supposed to build nearly a decade after the order for 40 a/c was
placed.
 This will mean 2 sq of fighters with no a/c to train the pilots on.

21. HAL’s TURMOIL
• HAL officials attribute the delays to the development
cycles of eqiupment and the fact that multiple stake
holders are involved, especially when it comes to
imported a/c.
• “There’s also the complaint that the services keep
changing their requirement”IAF now wants HAL to fit
“software defined radio communication sets in LCA
tejas” this requirement wasn’t there when contract
was signed in 2006.
• For fighter jets, HAL is completely reliant on external
sources the DRDO’s ADA (or) forign vendors like mig,
sukhoi & BAE systems.

22. MARKET SURVEY / DEALS IN THE
MARKET
110 MMRCA Deal
(US $ 7.7 billion deal)
Boeing partnerd with HAL&
Mahindra for F-18 hornets.
HAL MTA PROJECT (US $ 600 million)
205 planned for 50:50 clause
IL-276 planned b/w UAC & HAL
Intended to replace AN-32
Status: under development

23. AIRBUS C295 PROJECT (15000cr Deal)
Intended to replace AVRO fleet
Deal for 56 transport a/c
Make in India programme in
partnership with TATA
Out of 56, 16 would be off the shelf.
HAL MEDIUM LIFT HELICOPTER(MLH)
HAL is currently seeking out forign
partners either from russia (or) europe’s
airbus helicopters
Same class asMi-17

24. LUH KAMOV KA-226T (JV)
200 developed in Russia &
assembled by HAL in India
First 60 off-the shelf/remaining
140 by HAl
MH-60 ROMEO SEA HAWK
(USD 2 billion)
24 Multi-role Anti submarine
helicopter for navy

25. E-2D HAWKEYE
Quantity-4
HAL signed an agreement with
northrop grumman to work
together on the project
SHINMAYWA US-2
($1.35 billion deal)
2 fly away condition & remaining 10 are
to be built by local partner.
Mahindra partnered with shinmaywa.
MoU was signed b/w two companies for
strategic partnership for future order
&MRO

26. PREDATOR GUARDIAN
DRONES
USD $ 3 billion Deal
Quantity-22
By general atomics.
HAL SARAS (NAL/HAL)
A total of 120-160 saras will
be inducted into civil & military
sectors each
Expected to be inducted by
2022

27. REFERENCES
• https://www.thehindu.com/news/national/Pokhran-II-
delayed-Tejas-project-says-former-
scientist/article14474390.ece
• https://idsa.in/issuebrief/india-defence-budget-2017-
18_lkbehera_030217
• http://www.indiandefencereview.com/spotlights/defence-
spending-more-from-where/
• http://www.defproac.com/?p=4503
//economictimes.indiatimes.com/articleshow/62601270.cms?
utm_source=contentofinterest&utm_medium=text&utm_cam
paign=cppst
• https://idsa.in/book/indian-defence-industry_lkbehera