REPORT ON DEFENSE INUSTRY

IN INDIA
[Document subtitle]

Submitted By:
Submitted To: Section A
Prof. R. Sugant Group 1
Aakansha Lakhani
(16001)
Aashna Ahuja (16002)
Akash Debnath (16004)
Akshay S S (16005)
Anand M Dileep (16006)
Anirudh Kudoor (16007
 1. Apply Porter’s theory of National competitive advantage to defense
manufacturing sector in India

Porter’s Diamond model

Michael Porter theorizes that four broad attributes of a nation shape the environment in which
local firms compete, and these attributes promote or impede the creation of competitive
advantage. These attributes are mentioned as follows: -

Factor endowments-
 Basic factors- Only about 30% of our equipment is manufactured in India, mainly by
public sector undertakings. DPSUs and Ordinance Factories contribute about 90% of
the total domestic manufacturing output. These factories manufacture a wide spectrum
of products under weapons, ammunition, vehicles, clothing, general stores and
equipment for the defense services.
 Advanced factors- India ranks among the top 10 countries in the world as a prime
importer of defense equipment. Only about 30% of the equipment is manufactured in
India. The new government has decided to raise the cap to 49% through the FIPB
approval route.

Demand conditions-
 Demand in India has increased, this can be seen from the case where its clearly
mentioned that India has become one of the Top 5 arm importers besides China,
Pakistan, UAE and Saudi Arabia.
 The new government has clearly stated its goal to promote investment in the defense
sector, both in R&D and production
 in order to boost manufacturing and generate
employment in order to create a domestic defense industrial base, thereby resulting in
higher self-reliance and indigenization. This helps India in gaining competitive
advantage.
 The Make In India initiative is also going to play a crucial role in the defense sector.
The Defense Acquisition Council(DAC) has asked for building aircrafts and
submarines which will play a critical role in building the supply ecosystem, this boost
in FDI will help in bringing term capital, technology and it will help the country in
building an industrial base.

Related and Supporting Industries-

The whole manufacturing sector is dedicated to produce defense equipment and support the
industry. Other related industries are as follows: -
 MSMEs- 6000 MSMEs are currently operating in India and supplying components to
DPSUs.
 OEMs- OEM suppliers are there in India supporting the industry.
 DPSUs- These were the nominated production agencies to receive ToT(transfer of
technology) from foreign OEMs
 DRDO-
  L&T- the engineering and design capabilities of L&T have been leverages for Pinaka
missiles
 ISRO- Walchandnagar has helped ISRO manufacture sector casings over a number of
years in what can be classified as a long-term partnership.

Firm’s strategy, structure and rivalry-

The defense sector has strategized on attracting investments, setting up manufacturing

facilities, obtaining technologies and capabilities and generating high skilled employment.
India has an opportunity to leverage its advantage on IT and design expertise to occupy a high-
value niche in the technologically complex aerospace and defense value chain. In the coming
years, this can be the game changer as India could take a quantum leap in matters of information
warfare. Special support should also be provided to the MSMEs in defense production.
Role of private industry has also helped boost the defense industry. The inclusion of private
industries through partnerships, technology transfers and in some cases fundamental R&D
initiatives can help the defense industry to function better.