Frost & Sullivan on Wednesday concluded their second annual flagship event GIL 2010: India – The Global Community of Growth, Innovation and Leadership in Bangalore. The Congress, besides focusing on CEOs perspective on growth, had specific industry think tank sessions and several panel discussions that were held parellely. The defence think tank focused on the Indian defence offsets and Homeland Security (HLS) Market.
Apart from defence, the Indian HLS is also witnessing a surge and is set to grow on the back of the phenomenal growth in the industrial, manufacturing and infrastructure sectors.
The other segments that have immense potential are airport security, mass transport security, infrastructure protection, seaport security and maritime security. There would be an increased awareness for C3l First Responder and Disaster Management.
The increased participation of the Indian private sector industry and relatively less proliferation of the Indian defence PSUs in the HLS market makes this opportunity exciting and unique, in terms of defence and security markets. These growth segments are set to put the Indian HLS market, on an exciting growth trajectory and open a relatively new business segment. Indian companies can operate as standalone, as well as form relationships with foreign product and service providers or Systems Integrators.
However, there is a huge potential in these markets, the challenges are equally high in both the defence offsets and HLS markets as they come in the form of budgetary constraints. Most HLS segments still remain manpower intensive and it is a fragmented market, with varied spending patterns across domains.
Frost & Sullivan, along with the members and partners and the Strategic Partnership Consortium – a comprehensive alliance of visionaries, innovators and leaders, are all engaged in sharing, inspiring and creating a continuous flow of new ideas and fresh perspectives, which leverage innovation as a resource to help shape a better future for the growth of attending companies.
Huge Defence Modernisation Programme
India’s defence expenditure has been raised to Rs. 147,344 crore for 2010-11, up 8.13 per cent from the revised estimates of the previous fiscal. The country’s forthcoming defence modernization program will make it the second highest defence spender in the Asia Pacific region within the next five years, and the seventh largest globally by 2016.
Indian defence offsets are a key market driver for the broadening of the Indian defence industrial base. They are derived from the “Make and Buy” and “Buy’ segments of the purchase of defence weapons and equipment, over US$ 75 million-order value.
Defence offsets offer immense opportunity for the local Indian industry to partner with the best-in-class, in terms of technology and provide a platform for the indigenous industry for sourcing of products and services. This can be achieved in three ways:
– Direct purchase of or executing export orders for defence products or components manufactured by the Indian Industry;
– Direct foreign investment in Indian defence for defence industrial infrastructure, codevelopment, joint ventures and coproduction of defence products; and
– By direct foreign investment in defence R&D as approved by Ministry of Defence (MoD).
The MoD has now allowed for banking of defence offsets, which makes the landscape interesting and also opens avenues for greater Indian private sector industry participation apart from the defence public sector undertakings (DPSUs). That the industry trade bodies are interlocuting with the MoD, for greater participation and the FICV project, is testimony to the MoD’s commitment to gradually but surely broaden the military industrial base in India. India is set to source a major portion of its defence requirements, worth US$ 100 billion, based on its current equipment retirement, from foreign sources. Other opportunities exist in military aviation, naval systems and land systems.
