Indian Defence Industry[INDEX]

INDIAN DEFENCE INDUSTRY

An Agenda for Making in India

INDIAN DEFENCE INDUSTRY

An Agenda for Making in India

Laxman Kumar Behera

INSTITUTE FOR DEFENCE STUDIES & ANALYSES NEW DELHI

PENTAGON PRESS

Indian Defence Industry: An Agenda for Making in India Laxman Kumar Behera

First Published in 2016

Copyright ? Institute for Defence Studies and Analyses, New Delhi

ISBN 978-81-8274-905-4

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Contents

Preface

ix

Acknowledgements

xiii

List of Abbreviations

xv

List of Tables

xvii

List of Figures

xxi

1. Indian Defence Industry: The Journey to Make in India

1

Defence Industrialisation Phases

3

Can the Indian Defence Industry Make in India?

17

2. Ordnance Factories

20

Origin and Growth

20

Management

21

Employees, Production, Sales and Accounting

22

R&D and Technology Absorption

24

Execution of Orders

27

Pricing of OFB Products

29

Quality of Products

30

Exports

31

Capacity Utilisation and Impact of Modernisation

32

Poor Inventory Management

33

Outsourcing and Vendor Development

34

Corporatisation

34

Challenges from the Private Sector

35

Conclusion

36

3. Defence Public Sector Undertakings

38

An Overview

38

vi

Indian Defence Industry: An Agenda for Making in India

From Nomination to Competition

43

Defence Procurement: Share of DPSUs

44

Indirect Import

44

Vendor Development and Outsourcing

45

R&D and Technology Assimilation

47

Value Addition

50

Labour Productivity

50

Analysis of Profit Margin

53

Exports

54

Disinvestment and Listing on Stock Exchanges

57

Conclusion

59

4. The Private Sector

63

Why Private Sector in Defence Production

63

Defence Production: The Role and Scope of the Private Sector

64

Private Sector's Contribution to Capital Acquisition

67

What has Hindered Private Sector's Participation

68

Can the Make in India Initiative Save the Private Sector?

70

Conclusion

80

5. Defence Research and Development Organisation (DRDO) 83

DRDO: Origin and Growth

83

DRDO's Performance: An Overview

85

DRDO's Performance: A Critique

87

Defence R&D: The Problem Areas

90

Conclusion

106

6. Offsets

111

Evolution of Defence Offset Policy

112

Part I

113

Impact Analysis

113

Part II

125

Lessons from International Practices

125

Conclusion

139

7. Review of Policy Recommendations

143

Group of Ministers

143

Kelkar Committee

148

Sisodia Committee

151

Rama Rao Committee

153

Contents

vii

V.K. Misra Committee

155

Dhirendra Singh Committee

156

8. An Agenda for Make in India

164

Set up a Make in India Council within MoD

164

Articulate an R&D and Manufacturing Plan

165

Appoint an Additional Secretary within the DDP for the

Private Sector

166

Reform the OFs and DPSUs

166

Revitalise DRDO

167

Provide Conducive Financial and Procurement Framework to

the Private Sector

168

Streamline Defence Offset Policy

169

Curb Indirect Import

169

Involve the Industry in the Formulation of Qualitative

Requirements (QRs)

170

ANNEXURES

Annexure A Annexure B

Annexure C

Annexure D

DPP-2016: An Overview

173

Strategic Partnership: An Overview of the Aatre Task Force

Report

183

Foreign Investment Proposals Approved in Defence Sector

(As on July 2015)

187

Details and Status of Major Ongoing Projects

(Cost above Rs. 100 crore) of DRDO

191

Index

194

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