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Highlights of the CII-Deloitte report on Indian defence Industry

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Foreign Defence Suppliers are Seeking to Incorporate the Indian Defence Industry into Their Global Supply Chains: CII-Deloitte Defence Report
Highlights of the CII-Deloitte report on ‘Prospects for Global Defence Industry in Indian defence market’:

· Indian defence procurement would rise to an estimated USD 42 Billion (including USD 19.20 bn for capital acquisition) which could make India as one of the most attractive markets in the World.

· The defence capital expenditure budget is expected to achieve a compound Annual Growth Rate (CAGR) of 10 Percent from 2011 – 2015.

· Total indigenous production over 2011-2015 would need to expand from approx USD 30 bn to more than USD 70 bn in the span of 5 years to be able to achieve 70 percent indigenization by the year 2015. Defence industry would need to expand by an average of 30 percent a year over the next 5 years.

· It is estimated that India is likely to spend nearly USD 80 bn USD for next five years (2010-2015) on Capital expenditure.

· The Report provides Information to global investor firms to understand the Indian defence requirements and domestic industry capabilities and opportunities in the four key domains vis maritime, land , aerospace and electronics.

Mr. R.K. Singh, Secretary (Defence Production), Ministry of Defence, Government of India today released a CII-Deloitte report on ‘Prospects for Global Defence Industry in Indian defence market’ at Eurosatory 2010 exhibition in Paris. Mr Singh emphasized that the Buy and Make (Indian) Category is as an opportunity for foreign players to partner with the Indian Defence industry. He further stated that this new category would enhance the formation of JVs and Technology partnership between the Indian and the Foreign defence industry. While responding to a query he clarified that the Ministry of Defence is in favour of continuing with the FDI limit of 26 percent.

Over the past decade, the Indian Ministry of Defence has put into motion plans for an unprecedented modernization program of its defence capabilities. In this context, India has embarked on a major defence acquisition program, aimed at increasing the size, capability and self-reliance of its Defence Armed Forces. The report provides that the aerospace and defence sector is growing at an unprecedented rate and emerging as a key participant in the Asia Pacific region.

Report also provides indicative list of acquisition plans. In Union Budget 2010-11, expenditure of about USD 32.03 billion has been earmarked for national defence. More than USD 42 billion in total defence expenditure is targeted by 2015, of which approximately USD 19.20 billion would be expected to be spent on capital equipment for the Defence Armed Forces.

Mr Chandrajit Banerjee, Director General, Confederation of Indian Industry said “While it is clear that India is seeking a high level of self sufficiency in delivering its ambitious defence re-equipment and expansion program, it is also evident that there will be a high level of reliance on overseas interests to supply the necessary technology in a number of areas. Foreign OEMs are now looking at India as a critical market as well as a potential manufacturing partner.”

Mr. Gurpal Singh, Deputy Director General CII stated that India is gradually becoming a key outsourcing hub for the global defence industry. The continuous revisions of the Defence Equipment procurement procedures in the recent past suggest the intent of the Indian Government to streamline the procedures and make the system more transparent and speedier.

Nidhi Goyal, Director - Aerospace and Defence in Deloitte on release of the report says that “India is considered as the next destination of manufacturing given country’s strength like wider supplier base, low cost manufacturing, persistent focus on infrastructure development, huge pool of skilled workforce and increased penchant for enhancing competitiveness by the respective domestic firms”.

India has established a notional target for 70 per cent of new acquisitions in the future to be sourced from indigenous production. Ms Nidhi Goyal says “to meet the target of 70% indigenization, local industry should achieve an average growth rate of 30% a year over the next five years”. She further says that the current offset contracts are still not sufficient for Indian industry growth and hopefully the target for offset contracts at USD 10 billion by 2011 will give further boost to the industry.

The sheer volume of planned expenditure is expected to create new opportunities for foreign firms, as total spending will grow in absolute terms. India is also host to a mature manufacturing sector, which means it will often be able to offer more cost-competitive terms for large platform builds.

Ministry of Finance to extend payment of Risk Allowance upto 30.9.2010

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Government of India
Ministry of Personnel, P.G. & Pensions
Department of Personnel & Training

New Delhi, dated 16th June, 2010.


Subject:- Extension of Risk Allowance

    With reference to the decision of the Government to withdraw Risk Allowance w.e.f. 1.4.2009 and replace it with the Risk insurance scheme after consultation with Staff Side, a general instruction was issued by this Department vide OM No.21012/1/2008-Estt.(AL) dated 12th March, 2009 to all Ministries / Department having the component of Risk Allowance to examine the recommendation at para 4.2.68 of Sixth Central Pay Commission in the light of General Risk Insurance package formulated by General Insurers’ (Public Sector) Association of India (GIPSA) and consider as per their specific risk, needs and requirements by the respective Ministries/Departments after consultation with the Staff Side. The compliance report and the decision of the Government in this regard was required to be sent to this deptt. within two months. A subsequent reminder of even no. dated 29.10.2009 was issued by this Department to expedite the compliance report. However, compliance report has not been received by this Department till date.

2.    Keeping in view the requests from certain Ministries/Departments, it has been decided with the approval of Ministry of Finance to extend payment of Risk Allowance upto 30.9.2010 or till such time the Risk Insurance Scheme is finally introduced, whichever is earlier. All the Ministries/Deptts. are requested to ensure implementation of Risk Insurance Scheme before 30.9.2010. No further extension will be considered thereafter.

(Simmi R .Nakra)


Restructuring of Cadre of Artisan staff in Defence Establishments in modification of recommendations of 6th CPC

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No.11(5)2009 D(Civ-I)
Government of India
Ministry of Defence
New Delhi, the 14th June, 2010
The Chief of Army Staff
The Chief of Air Staff
The Chief of Naval Staff
& all Heads of Inter Services Organizations.

Subject:- Restructuring of Cadre of Artisan staff in Defence Establishments in modification of recommendations of 6th CPC.


The matter regarding revision of pay scale of Master Craftsman in Defence Establishments has been under consideration of the Government of quite some time. Now in partial modification of the 6th CPC recommendations made in para 3.8.27 of its report and amendment made in Civilian in Defence Services (Revised Pay) Rules, 2008, vide SRO 11(E) dated 28.8.2009, I am directed to convey the sanction of the President of restructuring of cadre of Artisan Staff in Defence Establishment as under,

2. The grade structure in the industrial as well as in the non-industrial trades, wherever already available and the pay scales of the Defence artisan staff shall stand modified w.e.f. 1.1.2006 as under:

(i) Skilled – Pay Band PB-1 Grade Pay Rs.1900
(ii) Highly Skilled Grade II – Pay Band PB-1 Grade Pay Rs.2400
(iii) Highly Skilled Grade I– Pay Band PB-1 Grade Pay Rs.2800
(iv) Master Craftsman – Pay Band PB-2 Grade Pay Rs.4200

3. (a) Wherever the grade structure in the Industrial as well as Non-Industrial trades is already existing in the ratio of 45:55, the erstwhile Skilled and High Skilled, and 25% of Highly Skilled in the grade of Master Craftsman, the following will apply,

• 45% of the posts may be granted the pay scale of Skilled Worker (Grade Pay of Rs.1900 in the Pay Band PB-1)

• 25% of the remaining 55% may granted the pay scale of MCM (Grade pay of Rs.4200 in the Pay Band PB-2), and

• The remaining posts may be divided in a ratio of 50:50 and redesignated as Highly Skilled Worker Grade-II (Grade Pay of Rs.2400 in Pay Band PB-I) and Highly Skilled Worker Grade-I (Grade Pay of Rs.2800 in Pay Band PB-I).

(b) The Placement of the individuals in the posts resulting from the restructuring shall be made w.e.f. 1.1.2006, in relaxation of the conditions, if any, i.e. trade test etc. as one time measure.

(c) Highly Skilled Grade I shall be en-bloc senior to Highly Skilled Grade II

4. (i) The post of Master Craftsman shall be part of the hierarchy and the placement of Highly Craftsman of Highly Skilled Grade I in the grade of Master Craftsman will be treated as promotion.

(ii) In the case of Defence Establishments where there is no category of Skilled Workers and direct recruitment’s made 100% at the level of Highly Skilled, the posts of Master Craftsman existing as on 1.1.2006 will be placed in PB-2 + GP 4200 and the remaining posts of Highly Skilled Workers may be bifurcated in HS-I in the ratio of 50:50.

(iii) In view of the above re-structuring, the artisan staff may be allowed to give revised option for pay fixation w.e.f. 1.1.2006 within these months from the date of issue of orders in this regard.

(iv) The existing recruitment rules for the Tradesman may be amended and RRs for the post of MCM may be framed accordingly.

5. The expenditure involved will be dehitable to the respective Heads of Defence Services Estimates.

6. To the extent of provisions indicated in the paragraphs above MoD letter No. 11(1)/2002-D(Civ-I) dated 20.5.2003 stands amended.

7. This issues with the approval of DOP&T U.O. No.5358/10/CR dated 25.2.2010 and Ministry of Finance I.D. No.2(16)E.III Desk/2008 dated 10.06.2010 and concurrence of Ministry Defence (Finance AG/PB) vide their U.O. No.164/AG/PB dated 14.06.2010.

(M.S. sharma)
Under Secretary of the Government of India

Source: CGStaffNews

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