Long and Short Range Missiles Offer Excellent

Business Prospects To Indian Industry 

CA  A. K. Jain

( I take the privilege of beginning this business advisory note with my
heartfelt  tributes to the “Missile Man of India” and President of India,
Bharat Ratna, Dr. APJ Abdul Kalam an epitome of intellect,
wisdom and simplicity. A People's President, who left a lasting
impact on severalfields ranging from science to politics. )

In recent years, the global geopolitical landscape has seen a surge in demand for advanced defence technologies, particularly in the domain of missile systems. Military operations and war threats in Russia Ukraine, Israel Yemen, Lebanon, Syria, Iran, Taiwan, Pakistan and Korea are extremely heated markets for all kinds of warfare materials including all kinds of missile systems.

As India emerges as a significant player on the global stage, there lies a compelling opportunity for its industries to venture into the manufacturing of long and short-range missiles. Not only does this promise to bolster India's defence capabilities, but it also presents a lucrative avenue for revenue generation through exports, potentially transforming the nation from an importer to a key exporter in the global arms market.

Prime Minister, Narendra Modi's vision for the defence sector under the "Make in India" initiative involves bolstering domestic production capabilities, reducing dependency on imports, and fostering indigenous development of defence equipment. The goal is to transform India into a global manufacturing hub for defence equipment and technology. This initiative aims to encourage foreign investment, collaboration, and technology transfer while nurturing local defence industries and start-ups. The objective is to enhance self-reliance in defence production, reduce costs, generate employment, and ultimately strengthen India's defence capabilities.

The journey from importer to acknowledged exporter in the realm of missile systems is not just a business strategy; it's a paradigm shift for India's industrial prowess. By harnessing its technological acumen, fostering innovation, and establishing itself as a dependable supplier, India can ascend as a prominent player in the global armament market.

India's defense industry has already made strides in missile technology, as seen with the successful deployment of Agni, Prithvi, and BrahMos missiles. Leveraging this expertise while continuously innovating and adapting to evolving global security needs can indeed be a profitable venture.As the nation charts its trajectory toward self-reliance and international influence, missile production emerges as a beacon of opportunity.

Strategic Advantages

• Defense Capabilities : Developing indigenous missile systems ensures reducing dependency on imports.

• Technology :  Investment in missile tech. fosters innovationand positioning India as a global leader intechnology.

• Economic Growth :  Missilesexport holds immense economic potential for India's GDP and employment opportunities.

• Importer to Exporter : Indian missile manufacturers can capture a substantial share of the global market.

• Strategic Partnerships: Collaborations with other nations for joint manufacturing can enhance expertise.

• Global Arms Market : Adherence standards will bolster India's reputation as a reliable supplier in the global arms market.

Challenges

While the prospect of venturing into missile production holds immense potential but also offers several challenges. To support the new entrepreneurs’ regulatory mechanisms should be simplified in the entire defense manufacturing sector.The government may instruct lending institutions to consider this as a priority sector of their business besides foreign investment can also be invited aggressively. Appropriate fiscal incentives may be granted. Technology and skill development must be proactively promoted. A centralized market system can be developed for all those who need the services.

Major Missile Producing Countries & Companies

•  United States :  Lockheed Martin, Raytheon, Northrop Grumman, and Boeing like the Tomahawk, Hellfire, and Patriot missiles.

• Russia : Almaz-Antey, Tactical Missiles Corporation (KTRV), and NPO Mashinostroyenia produce Iskander, S-400, and Kalibr.

• China : China Aerospace Science (CASC) and China Aerospace Science (CASIC) produce the DF series.

• France : MBDA develop missiles like the Meteor and Scalp.

• Israel : Israel Aerospace Industries (IAI) & Rafael Advanced Defense produce the Iron Dome, David's Sling, & Spike .

•  India : Defence Research and Development Organisation (DRDO) produces Agni series and the BrahMos .

• Pakistan : Kahuta Research Laboratories (KRL), National Engineering and Scientific Commission (NESCOM), Pakistan Ordnance Factories, Space Research Commission.

• Bangladesh : Government-owned Bangladesh Machine Tools Factory manufactures missile systems.

• North Korea: Missile program involves various organizations, They produce missiles like the Hwasong series.

• Germany : ASRAD produces Stinger, RBS-70 mk2, Igla, Mistral, Starburst missiles

• Iran : Bavar,Ya Zahra ,Raad ,Mehrab

• Japan : Mitsubishi Heavy Industries, IHI Corporation, NECCorporation, Fujitsu Limited.

• Myanmar : GYD-1B(KS-1M) missile production facility

• Poland : Polish SPZR Poprad

• Romania : CA-94,CA-95

• South Africa : Umkhonto, Marlin

• Sweden : MSHORAD (Bolide missile)

• Switzerland : RSA, RSC-54

• Taiwan : Sky Bow I

This is not an exhaustive list. Several other countries and companies are also involved in the manufacturer of different types of missile systems.

Indicative Pricing of Various Missile Systems
Country	Type	Pricing
Russian	Kh-101 cruise missile	$13 million
	Kalibr cruise missile	$ 6.5 million
	Kinzhal ballistic missile	$15 million
	Iskander	$3 million
USA	US Air Force ICBM	$75 to $118 million
India	Agni-5 ICBM	Rs. 50 cr.
	Akash	Rs. 2.5cr.
	Brahmos	25-35 cr.
	Prithvi	Rs.4 cr.
	Pralay	Rs. 5 cr.
	Parahar	Rs.4 cr.

 

Global Arms Business Outlook

Stockholm International Peace Research Institute’s (SIPRI ) identified India, Saudi Arabia, Qatar, Australia and China as the top five arms importers in 2018-22, accounting for 36 per cent of global arms imports during this period. India's share globally was 11 per cent followed by Saudi Arabia with 9.6 per cent and Qatar with 6.4 per cent.

Imports of major arms by European states increased by 47% between 2013-17 and 2018–22 in the backdrop of the war in Ukraine.The U.S. share of global arms exports increased from 33% to 40% while Russia’s fell from 22% to 16%.Arms imports by Pakistan increased by 14% between 2013–17 and 2018–22 and accounted for 3.7% of the global total with China supplying 77% of Pakistan’s arms imports in 2018–22.

Indian Arms Import Outlook

According to SIPRI Trends in International Arms Transfers 2022 report, with an 11% share of total global arms imports, India was the world’s biggest importer of major arms in 2018–22, a position it has held for the period 1993–2022.Russia was India’s largest arms supplier in the periods between 2013-17 and 2018-22, but its share of arms imports to India fell from 64% to 45% while France emerged as the second-largest arms supplier to India between 2018-22 at 29%, followed by the US at 11%.India also imported arms during this five-year period from Israel, South Korea, and South Africa which are among the top arms exporters globally.

Procurement from foreign countries in 2017-18 was Rs 30,677.29 crore, while it went up to Rs 38,115.60 crore in 2018-19 and Rs 40,330.02 crore in 2019-20, Minister of State for Defence Ajay Bhatt had informed the Lok Sabha in February this year.(16 May 2023)

Headquartered in Hyderabad, Bharat Dynamics Limited (BDL), was incorporated on 16 July, 1970 as a Public Sector Undertaking under the Ministry of Defence, Government of India to be the manufacturing base for guided missile systems and allied equipment for the Indian Armed Forces.

India has successfully tested hypersonic technology missiles, joining the US, Russia, and China as countries with operational hypersonic missiles. This achievement has propelled India to the seventh rank in the world's most powerful missiles for 2022, with the AGNI-5 system.

Ministry of Defence has set a target of achieving a turnover of $26 Billion in  defence Manufacturing by 2025, which includes $5 Billion exports. Till April 2023, a total of 606 Industrial Licences have been issued to 369 companies operating in Defence Sector.

Technology

• Missile manufacturing involves a blend of advanced technologies across various domains. Some key technologies involved include :

• Materials and Metallurgy : High-Strength Alloys : Materials that withstand extreme conditions like high temperature, pressure, and stress.

• Composite Materials : Lightweight but strong materials like carbon-fiber composites that offer high strength and reduced weight.

• Precision Engineering : Computer Numerical Control (CNC) Machining: Utilized for precise shaping and cutting of components.

• 3D Printing/Additive Manufacturing : Allows for rapid prototyping, customization, and production of complex parts.

• Guidance and Control Systems : Inertial Navigation Systems (INS): Provides accurate guidance by using gyroscopes and accelerometers.

• GPS and Satellite Navigation : Enables precise positioning and guidance.

• Propulsion: Rocket Propulsion : Utilizes advanced propulsion techniques like solid or liquid fuel systems for propulsion.

• Advanced Thrust Vectoring : Provides greater maneuverability and precision.

• Radar Systems : For tracking and detecting targets.

• Infrared Sensors : Detecting heat signatures for target acquisition.

• Lidar Systems : For precise distance measurement.

• Embedded Systems : Microprocessors and control systems embedded within the missile for computations and control.

• Advanced Software Algorithms : For navigation, target tracking, and control.

• Simulation and Modeling : To predict missile behavior and performance before physical testing.

• Wind Tunnels and Test Ranges : To test aerodynamics and performance in controlled environments.

• Automation and Robotics : Streamlining production processes and ensuring precision.

• Quality Control Systems : Ensuring adherence to strict quality standards throughout manufacturing.

• Encryption and Cyber Defense : Protecting sensitive data and preventing cyber threats targeting missile systems.

The integration and advancement in these technologies play a vital role in the development, manufacturing, and enhancement of missile systems, ensuring accuracy, reliability, and effectiveness in various defense applications.

Project Cost

The cost of manufacturing missiles can vary significantly based on various factors, including the type of missile, its complexity, range, guidance systems, payload, and production volume. Military-grade missiles are highly sophisticated and can require substantial investment in research, development, testing, and manufacturing.

Recently, BrahMos Aerospace  sought 200-acre land for the BrahMos missile manufacturing project which is the part of Defence Corridor being developed in UP. The delegation from Aerospace had  met CM Yogi Adityanath. The estimated cost of the project is about Rs 300 crore. The CM has also estimated that over 5,000 people will get direct employment from the venture.

Recommendations to GOI

1. Investment in R&D : Allocate funds and collaborate with academic institutions and private sectors.

2. Public-Private Partnerships : Aggressively foster partnerships between government and private companies to leverage expertise, resources, and capabilities. Incentivize private sector involvement through tax breaks, subsidies, or joint ventures.

Skill Development: Establish specialized training programs to develop a skilled workforce tailored to the defense industry's needs.

Streamlining Regulations: Simplify and expedite regulatory processes to ease the complexities involved in obtaining licenses, permits, and approvals for defense manufacturing. Create a conducive environment for businesses by reducing bureaucratic hurdles.

Infrastructure Development: Build state-of-the-art infrastructure facilities, including specialized industrial zones or clusters focused on defense production. This includes technology parks, testing facilities, and manufacturing hubs.

Encourage Innovation and Startups: Provide meaningful  incentives and support to startups and small-to-medium enterprises (SMEs) engaged in defense manufacturing.

Quality Standards and Certifications: Emphasize on international quality standards and certifications to ensure the produced goods meet global benchmarks.

Long-term Procurement Plans: Develop a clear, long-term procurement strategy to provide stability and assurance to manufacturers. Predictable demand can encourage investments in manufacturing capabilities. Centralised marketing mechanism can be established for exports.

Incentivize Localization: Provide preferential treatment to domestically manufactured products in government procurements to boost demand and incentivize localization.

Implementing these recommendations will require a multi-faceted approach involving collaboration between government, private sector, academia, and international stakeholders to build a robust and self-reliant defense manufacturing ecosystem in India.

Demand Trend

Washington, Feb 17, 2023 (Reuters) - European demand for U.S. weaponry is soaring, but instead of big-ticket items like jets and tanks, shopping lists are focused on cheaper, less-sophisticated items such as shoulder-fired missiles and drones that have proven critical.  Countries close to Russia like Poland, Finland and Germany are striking deals to build U.S. weapons in Europe, negotiating new deals to buy arms and looking to speed up existing contracts, according to interviews with military officials and industry executives, and a Reuters review of recent announcements by governments and defense manufacturers. RTX, maker of the Patriot, AMRAAM, Sidewinder, Javelin, Stinger, and other missiles featuring significantly in the war in Ukraine and in the defense preparations of neighboring NATO countries has logged about $2 billion in replenishment orders as a result of the conflict and expects to top that figure in the coming year.  Raytheon Technologies has logged large orders for AIM-120 AMRAAM and other missiles, and that all 18 countries using the Patriot air defense system are ordering Tactical (GEM-T) rounds for their Patriot launchers.  India inked an export deal with the Philippines, signing a $375 million contract for the BrahMos shore-based anti-ship missile system.

Conclusion

The best approach to venture in this project for the new entrepreneur will be to tie - up with an existing manufacturer outside India and reduce technology and financial risk. Nevertheless, it's crucial to weigh all aspects comprehensively before venturing into such a specialized and sensitive industry. Collaboration with government agencies, leveraging existing expertise, ensuring compliance with international regulations, and understanding market dynamics are key to success in the defense sector. Embracing missile manufacturing not only fortifies national security but also emerges as a significant contributor to the nation's economic growth and technological prowess on the world stage.

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Note : CA  A. K. Jain  ( caindia@hotmail.com ) the author  of this article a Chartered Accountant by profession is inspired by various developmental initiatives of Prime Minister Narendra Modi to make India self reliant in Defence sector and boost industrial employment . For Indian industries and entrepreneurs this is a superb business opportunity which offers very high profit margins and huge market both in India and outside India.

( Information Source : Multiple Google Locations )