India's defense sector is poised for a significant boost with a colossal investment of Rs2.23 trillion ($26.8 billion) allocated for defense acquisitions covering land, air, and sea domains. The Defence Acquisition Council of India, in its announcement on November 30, approved the Area of Necessity (AoN) for capital acquisition proposals, with a strong emphasis on sourcing 98% of the expenditure domestically.
In addition to revealing plans for acquiring new platforms and enhancing existing assets, the DAC has given the green light for substantial amendments to the Defence Acquisition Procedure. Going forward, all categories of procurement must include a minimum of 50% indigenous content.
To facilitate the active involvement of startups and Micro, Small, and Medium Enterprises (MSMEs) in the defense ecosystem, it has been decided to consider registered MSMEs and recognized start-ups for the issuance of a Request for Proposal (RFP) in cases with an AoN cost of up to $36 million. Furthermore, this financial threshold can be flexibly adjusted, on a case-by-case basis, with the approval of the Defence Procurement Board (DPB) for AoN costs up to $60 million.
India's ambitious 'Make in India' indigenization program, launched in 2015, spans all sectors of the economy, with a particular focus on the defense sector. The Government of India has set a target to achieve a turnover of $25 billion within the Indian defense export sector by 2025, including $5 billion in Aerospace and Defense goods and services.
The DAC has given AoN for the acquisition of two types of anti-tank munitions, specifically Area Denial Munition (ADM) types 2 and 3, designed to neutralize tanks, armored personnel carriers, and enemy personnel. In replacing the aging Indian Field Gun (IFG), an AoN has been granted for the acquisition of a cutting-edge Towed Gun System (TGS), slated to become the backbone of the Indian Army’s artillery units.
Additionally, the AoN has been approved for the acquisition and integration of an Automatic Target Tracker (ATT) and Digital Basaltic Computer (DBC) for T-90 Tanks, enhancing their combat advantage. The DAC has also granted AoN for a 155 mm Nubless projectile for use in 155 mm artillery weapons, aiming to enhance lethality and safety.
For the Indian Navy's surface platforms, the DAC granted AoN for the acquisition of Medium Range Anti-Ship Missiles (MRAShM). Envisioned as a lightweight Surface-to-Surface Missile, the MRAShM will serve as the primary offensive armament for Indian Naval Ships.
Hindustan Aeronautics Limited (HAL) received AoNs for the acquisition of Light Combat Helicopters (LCH) for the Indian Air Force (IAF) and Indian Army, along with Light Combat Aircraft (LCA) Mk 1A for the IAF.
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