The Ministry of Defence (MoD) under its Make In India initiative is now encouraging the private sector to manufacture ammunition. Previously, only state-owned Ordnance Factory Board (OFB) was permitted to produce ammunition and India’s private sector was only allowed to manufacture parts of ammunition such as the shell or fuse.
A senior Indian Army official said of the new opportunity for the private sector: “It clearly shows that the Army’s requirements are not being totally met by the OFB and import is not an option anymore.”
Under the new policy, the MoD is willing to provide long-term commitments and firm orders of multiple types of ammunition to private players, but only at competitive prices.
“The Indian industry was denied participation in the manufacture of ammunition, as no industrial license was issued for filling process. Thus the monopoly stayed with OFB, whose lack of capacity restricted the demand of the services, gradually leading to deficiencies over the years. It was not that the industry does not have the capability to manufacture with transfer of technology, but they have not taken any concrete action to acquire technology in this regard till now,” a senior MoD official said.
Indian private sector companies participating in the manufacturing of ammunition for the first time include both leading industrial houses — Chowgule Group, Kalyani Group, Reliance Defence Engineering Limited, and Godrej & Boyce — and several small- and medium-sized sector companies — Indtech Construction Private Limited, HYT Engineering Company Private Limited, Micron Instruments, Premier Explosives Limited, Solar Industries India Limited, Himachal Futuristic Communications Limited and Continental Defence Solutions Private Limited.
However, Bhupinder Yadav, a retired Indian Army major general and defense analyst, said industry here may develop the capability to indigenously manufacture ammo by forming joint ventures with foreign partners that already have established designs.
“Most of the ammunition mentioned in the RFI are of East European origin, and the companies may have edge. However, the upgrade variants could be provided by European and Israeli original equipment manufacturers,” Yadav said.
Several overseas defense companies — such as Expal of Spain, Nexter of France, Rosoboronexport of Russia, Chemring Group of the United Kingdom, Saab of Sweden, Elbit of Israel, Rheinmetall Defence of Germany, Diehl Defence of Germany, Denel of South Africa, Yugoimport of Serbia, Bumar of Poland, Orbital ATK Armament Systems of the United States and Arsenal of Bulgaria — are negotiating with private Indian companies to provide cutting-edge technology for multiple Indian ammunition programs.
As of now, only private sector Bharat Forge Limited, a subsidiary of Kalyani Group, has announced a joint venture company — BF Elbit Advanced Systems Private Limited — to manufacture a multitude of ammunition types and smart bombs in India.
Currently, the annual ammunition market size in India exceeds $1 billion, which is largely due to imports and OFB, according to Yadav. “With the past demonstrated OFB production capability, there is scope of additional annual capacity of approximately $250 million in private sector,” he added.
“Ammunition was one of the shortlisted categories for the identification of Strategic Partners, which is yet to take off. This RFI should provide the necessary inputs for the MoD to select this private sector partner,” Ankur Gupta, a senior defense analyst with Ernst & Young India, said. “Also, a minimum 10-years order book should help in the creation of a viable business plan, and the necessary investments could be forthcoming.”