India defence equipment market

2.  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

4.  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

5.  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

6.  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

7.  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

8.  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