India's private defence sector will not be affected by economic downturn, says industry body

The growth of India's private defence sector is unlikely to be affected by the global economic slowdown, a director of the Federation of Indian Chambers of Commerce and Industry (FICCI) has said.

Speaking to Jane's on 21 April, Vivek Pandit said the most influential factor in the country's private sector, which has been allowed to manufacture defence equipment since 2001, would be the Indian general election that commenced on 16 April and is scheduled to end a month later.

"India's private sector is broadly insulated from the economic crisis and is certainly less affected than other countries," said Pandit, who is responsible for defence industry matters within the FICCI.

"India is forecast to grow at 6.5 to 7 per cent this year, which is a slowdown from the previous 8 per cent growth, so you will see some private defence companies having to reallocate resources and become efficient, although the impact will not be major."

The private defence sector in India currently receives about 9 per cent of the country's total USD7.3 billion procurement budget, or around USD700 million.

About 21 per cent of this budget is spent on procuring capabilities from the state-owned public sector undertakings (PSUs) - such as Bharat Electronics Limited and Hindustan Aeronautics Limited - with the remaining 70 per cent being awarded to overseas vendors.