India enjoys a strategic location with reference to continental Asia and the Indian Ocean Region. The Indian peninsular landmass covers an area of 3.3 million square km and its population of over 1 billion people encompasses a vast range of ethnic, religious, cultural and linguistic diversities. India's geographical area, strategic location, trade links and its exclusive economic zone (EEZ) connect, its security environment directly with its extensive neighborhood are some factors which involve concomitant security concerns, responsibilities and challenges in an increasingly global environment.
While geo-strategic imperatives play a defining role in our security paradigm, economic and social imperatives also shape our security concerns and objectives. The economy is growing rapidly and is among the fastest rising in the region and the world. The trajectory of India 's national development is based on the core values of democracy, secularism and peaceful co-existence. A stable and peaceful regional and global environment is necessary to achieve the aim of growth and prosperity for our citizens.
The country's defence services include three Armed Forces (i.e., the Army, the Navy and the Air Force), and other Departments, primarily Defence Research and Development Organisation (DRDO) and Defence Ordnance Factories.
Defence Research and Development Organisation (DRDO)
The Defence Research and Development Organisation (DRDO) has come a long way since its modest beginning in 1958. Starting with only 10 laboratories, DRDO has grown multi-dimensionally and has evolved to be a core research organisation with a vast network of 52 laboratories and establishments spread across the country. With a vision to empower India with cutting-edge technologies and equip our services with internationally competitive systems, DRDO has proven its competence to produce state-of-the-art strategic and tactical military hardware and related technologies in diverse disciplines such as aeronautics, armaments, combat vehicles, combat engineering, electronics, missiles, life sciences, materials and naval systems. At the core of this technological strength of DRDO is its expertise in system design, system integration, testing and evaluation and project management built over the last five decades, which has enabled it in developing indigenous capabilities in weapons and their delivery systems.
Defence Ordnance Factories
Indian Ordnance Factories is a giant industrial setup which functions under the Department of Defence Production of the Ministry of Defence. Indian Ordnance Factories, headquartered at Kolkata, is a conglomerate of 39 Factories, 9 Training Institutes, 3 Regional Marketing Centres and 4 Regional Controller of Safety.
Today,Ordnance Factor Board (OFB) along with its 39 factories spread over India provide:
Overview of defence spending in India
Expenditure on Defence in the year 2010-11 was US$ 33.5 billion. There was a 6.9% increase from the defence spending in 2009-10.
Defence Public Sector Units (DPSUs) continue to play an integral part in the defence production. Defence has for a long time been a part of the public sector since it requires large investments and substantial research and development (R&D) support. India maintains an extensive defence industrial base with 39 Ordnance Factories and 8 DPSUs which are engaged in the manufacture of state-of-the-art weapons and systems for the armed forces. Over the years, these organisations have aimed to achieve self-sufficiency and indigenization of defence manufacturing in the country. In terms of value of production, DPSUs account for more than 65 % of the total industrial output of all defence public sector entities in India . During 2010-11, the value of production by DPSUs totaled nearly US$ 3.9 billion.
Private Sector in Indian Defence Industry
The private sector mainly has been involved in supply of raw materials, semi-finished products, parts and components to Defence PSUs and Ordnance Factories to a great extent and also to Base Workshops of Army and Base Repair Depots of Air Force and the Dockyards of the Navy. Defence PSUs and Ordnance Factories are outsourcing their requirements from private sector (mainly SMEs) in the range of 20-25%. Out of this outsourcing, about 25% requirement is met through small scale sector.
Several hi-tech equipments have also been successfully produced by the private sector. In the quest for self-reliance in the crucial sector of defence, the Government has been continuing its efforts to indigenize defence equipment wherever technologically feasible and economically viable. It has been a part of indigenization efforts to locate and develop broad-based indigenous supply source – both in the public sector and in the civil trade for many complicated and intricate equipments.
After considering the capital intensive nature of defence industry sector as also the need to infuse foreign technology and additional capital including FDI, government decided in May, 2001 to open Defence industry for private sector participation up to 100% with FDI permissible up to 26% - both subject to licensing. Now with this policy change all defence related items have been removed from reserved category and transferred to the licensed category, as a result of which private sector can manufacture all types of defence equipment after getting a license.
Major Public Sector Undertakings in defence Sector
Major Private Players in defence sector
Opportunity in Indian Defence industry
The defence opportunity is a win-win situation for the country. With stronger focus on IT, high-tech engineering and research and design capabilities. India can leverage its IT infrastructure and manufacturing potential to be one of the key global sourcing destinations for defence systems and equipment.
Indian industry is upbeat about the opportunities in defence and aerospace with continuous efforts of Government to develop and fine-tune the procurement regime and industry drivers that will enable industry to grow into a robust and sustainable defence industry in India.
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