The ammunition manufacturing market offers appealing and significant opportunities for both, Indian and foreign, companies, throughout the supply chain. India has the third-largest armed forces in the world. The budget includes expenditures for armed forces and civilian salaries, pensions, armed forces’ modernization, production establishments, maintenance, and its research and development organizations. The government took several initiatives to encourage ’Make in India’ activities through policy support initiatives to modernize its armed forces and reduce reliance on external defence procurement.
The ammunition manufacturing market was valued at INR 883.06 Bn in FY 2022, up from INR 788.20 Bn in FY 2018, expanding at a compound annual growth rate of 2.88%. The Ministry of Defence (MoD) develops defence and security policies and oversees their implementation by the armed forces (that is, the Army, the Navy, and the Air Force). The budget includes expenditures for armed forces and civilian salaries, pensions, armed forces’ modernization, production establishments, maintenance, and its research and development organizations. The government took several initiatives to encourage ’Make in India’ activities through policy support initiatives in order to modernize its armed forces and reduce reliance on external defence procurement.
Impact of COVID-19:
During the first and second waves of COVID-19, the ammunition manufacturing industry witnessed a number of policy decisions being made and implemented. The government raised the automatic route limit for foreign investment in the sector and banned the import of certain defense items. DPSUs had stopped working on most projects after the initial lockdown was imposed in 2020. Because of disruptions in the supply chain, the price of materials and components for defense equipment surged by 10% – 15%.
Territorial disputes with Pakistan and China potentially leads to increased military spending by India, which drives the growth in the Indian ammunition market. As disputes rises, the demand for weapons and ammunition increases to ensure the country’s readiness for potential military conflict.
Key deterrents to the growth of the market:
India is one of the largest importers of military equipment in the world, including ammunition. According to a report by the Stockholm International Peace Research Institute (SIPRI), India was the world’s second-largest importer of major weapons in the period 2016-2020, behind Saudi Arabia. India’s dependence on imported ammunition has been a concern for the country, as it has been working to increase its domestic production and reduce dependence on foreign suppliers. India’s military modernization has been ongoing for several decades, some of the reasons for the slow modernization include bureaucratic delays, corruption, and a lack of funds.