• With perceived threats and a recovering economy, defence spending to increase substantially. • Present Offset Opportunity is estimated at USD 5 bn. • Offset opportunity expected to rise to USD 12 billion over next 3 years and USD 4‐5bn per year thereafter. • Greater private sector participation in defence, to be in favour of Indian companies. • 55% of offset contracts are taken by the private sector. • Indian Aerospace and Defence industry are emerging as an outsourcing hub for many services like CAD,CAM and CAE, manufacturing and design engineering, testing and integration, and technical publications

1. GUJARAT:
EMERGING BASE FOR INDIGENIZATION OF
THE INDIAN DEFENCE INDUSTRY
DEFENCE OFFSET SECTOR PROFILE
1

2. Table of Contents
1. India–Preferred Investment Destination
2. Defence Spending & Offsets : Global Scenario
3. Defence Spending & Offsets : Indian Scenario
4. Defence Offsets : Overview
5. Advantage Gujarat : Emerging Offset Destination
6. Gujarat : Manufacturing & Engineering Hub
7. Gujarat : MSME Scenario
8. Annexures

3. Defence Spending Global Scenario
Global Defence expenditure is on an upward trend and stands at over USD
1.7 trillion at current prices for 2012, registering an increase of 45 percent since 2002
2000
World Defence Spending (USD billion)
1289 1352 1420 1468 1525 1605 1711 1739 1741 1735 1753
1500
1000
World military expenditure in 2012 totaled
USD 1753 billion, around 2.5% of world GDP
M h 5 h f ll ili di
500
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
More than 4/5th of all military expenditure
in 2012 was made by 15 countries
% share in Global Defence Spending
1%
1%
2%
18%
USA
China
Russia
800 682
UK
600
39%
10%
3%
3% 5%
2%
3%
3%
2%
2%
Japan
France
Saudi
Arabia
400
200
0
165 90.7 60.8 59.3 58.9 56.7 48.3 45.8 34
4%
3%
India
Source: Stockholm International Peace Research Institute (SIPRI)

4. Defence Offsets Global Scenario: 2021
Offset revenue of top 20 countries to be around USD 424.57 billion by 2021
APAC countries will register the highest growth in terms of CAGR in military offset market
Saudi Arabia will have highest military offset revenue between 2012‐2021 : ~ USD 62.63 billion
Offset market share‐ 2012
Germany
Greece Offset market share‐ 2021
2.40%
4.10%
3.60%
3%
2.90%
2 90%
7%
ff
Italy
Netherlands
Norway
Poland
Turkey
UK
2.10% 2.70%
2.40%
2.60%
2.80%
3.60%
7.50%
2.90%
3.50%
4.30%
14.40%
4.90%
3.50% 1.90%
South Africa
Australia
India
Indonesia
South Korea
3.50%
3.80%
1.90%
6.40%
3 40%
14.80%
5%
6.40%
12.10%
20%
9.40%
2.60%
Singapore
Taiwan
Brazil
Chile
Colombia
Saudi Arabia
11.50%
2 90%
8.20%
9.70%
2 90%
3.40%
4
2.90%
2.10% 7.20% 2.10% UAE 2.30% 2.90%
Source: Frost & Sullivan

5. Defence Offsets Global Market Size
India, Saudi Arabia & Brazil will be among the largest global defence
offset markets and provide enormous opportunities for growth
High
( 5‐9% )
th
Saudi Arabia
I di
1
17
s for Growt
India
Brazil
South Korea
2
3
4
2 1
3
4
5
7 6
8
15
18 13 10
Medium
( 0‐4% ) portunities
UAE
Australia
5
6
12
13
Chile
Norway
9
15 11
Low
Op
7
8
Colombia 14
Poland
Italy
15 Taiwan
14 12
Market Low
( 0‐20 billion)
Medium
( 20‐40 billion)
High
( > 40 billion)
( < 0% )
9
10
15
17
UK
Turkey
Chile
11 18
Netherlands
Indonesia
Singapore
Size
Source: Frost & Sullivan 5

6. Defence Spending & Offsets : Indian Scenario
6

7. Organizational Structure Ministry of Defence, India
Ministry of Defence
Raksha Mantri
Raksha Rajya
Mantri
Established to improve time and
cost management across all
Defence Acquisition Council
(DAC)
Ensures effective implementation of
Government policy directions and
execution of capital acquisition processes
approved programmes
within approved budget
Defence Services
Department of
Defence
Department of
Defense
Production (DDP)
Defence Finance
Department of
Defence R & D
(DRDO)
 Headquarters of
I t t d
 Defense budget
 Establishment
• Prime design
f
• Deals with matters
pertaining to defense
• Examines need for
Integrated
defense Staff (HQ
IDS)
 Army
 Navy
 Indian Air Force
matters
 Defense Policy
 Defense co‐operation
with
foreign countries
 Co‐ordination of all
agency for
formulation and
execution of
programmes of
design/developme
nt of state of
weapons systems
production,
indigenization of
imported stores,
equipment, spares,
planning control and
responsible for DPSUs
equipment ‐
Examines financial
requirement ‐ Makes
budgetary provisions
‐ Participates in
commercial
negotiation
7
defense related
activities
p y
and equipment of
Armed forces
p Source: Ministry of Defence, Government of India

8. Overview India Defence Scenario
India has the 3rd largest armed forces in the world in terms of active personnel
India is world’s largest arms importer and accounts for 14 per cent of the world’s arms imports
India ranks 8th globally in military spending
India’s spending on Defence sector is expected to exceed USD 100 billion over the next few years
India’s Defence budget for the year 2013‐14 :
INR 2,03,672.1 crore (USD 37.4 billion)
Defence expenditure accounts for
Share of Indian Defence Services in the Defense Budget
17%
7%
approximately 13% of India’s total expenditure 49%
Army
Army receives the largest allocation of
the Indian Defence budget
27% Airforce
Defence Expenditure of India (USD billion) ; Defense Expenditure as % of GDP
36 7
41.6
49 49.2 49.6 48.3
60
50
40
lion
2.9% 2.8% 2.8% 2.8% 2.5% 2.3%
2.6%
2.9% 2.7% 2.6% 2.5%
28.5 29.2
33.9 36.1 36.2 36.7
30
20
10
USD bill
8
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: SIPRI, KPMG Analysis; 1USD = INR 55

9. Overview India Defence Scenario
India has the 3rd largest armed forces in the world in terms of active personnel
India is world’s largest arms importer and accounts for 14 per cent of the world’s arms imports
India ranks 8th globally in military spending
India’s spending on Defence sector is expected to exceed USD 100 billion over the next few years
Share of Indian Defence the Defence Budget
India’s Defence budget for the year 2013‐14 :
INR 2,03,672.1 crore (USD 37.4 billion)
Defence expenditure accounts for approximately 13% of
India’s total expenditure 17%
7%
Army
Airforce
Services in Army receives the largest allocation of the Indian
Defence budget
49%
27%
Navy
Department of Defen
Production and R&D
Defense Expenditure of India (USD Defense Expenditure as % of GDP
41.6
49 49.2 49.6 48.3
60
50
40
on
2.9% 2.8%
2.8%
2.8% 2.5% 2.3%
2.6%
2.9% 2.7% 2.6% 2.5%
billion) ; 28.5 29.2
33.9 36.1 36.2 36.7
30
20
10
USD billio
9
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: SIPRI, KPMG Analysis; 1USD = INR 55

10. Indian Defence Industry Trends & Drivers
Current Ratio of India’s Defence procurement : 70 per cent from foreign sources ; 30 per cent from Indigenous sources
Government of India is seeking to expand procurement through
indigenous sources, from the current 30 per cent to the target 70 per cent over the next decade
Overall size and immediate modernization needs of Indian defense forces are enormous
Improved Infrastructure
Modernization of Defence
g , p g p
Availability of Skilled
Workforce
Trends
&
Drivers
1
10
9 2
Forces
Increasing Defence Spending
Technology Transfer & Joint
Ventures
3
4
8
6
7
5
Liberalization of Defence Sector
Increasing Domestic Player
Involvement
Increasing Overseas Supplier
Involvement
Increasing Manufacturing
Capabilities
Offset Driven Obligations
10
Source: TWB Report : Achieving Defence Offsets in India
p

11. Defence Spending Bifurcation
Capital Expenditure vs. Revenue Expenditure
India allocates about 2.1% of its GDP towards defence spending, of which 40% is allocated to capital acquisitions
Incremental growth in capital expenditure of India’s Defence budget
Of the total defence outlay for 2013‐14, INR 86,741 crore (USD 15.76 billion) will be for capital expenditure
Before 2004‐05, Indian defence forces had a Capital‐to‐Revenue ratio of 27:73 but since then it has increased by
about 12 per cent points to 39:61
17%
18%
14%
13% 13%
13% 13%
20%
18%
16%
14%
80
70
60
25.1
28.4
31.6
35.9
40.7
9%
11% 11%
13% 12%
10%
8%
50
40
30
Revenue Expenditure
Capital Expenditure
Growth rate
3% 22.75
12.98
16.64 19.14
19.8
7.2 7.6 9.02 9.36 9.86 13.2 13.95 16.1 18.2 21.1 10.8 11.4 23.9 27.1
6%
4%
2%
0%
20
10
0
11
2005 2006 2007 2008 2009 2010 2011(P) 2012(P) 2013(P) 2014(P) 2015(P) 2016(P)
Source: ICD Research, KPMG Analysis

12. Indian Defence Forces Modern Equipments Required
Army Air Force Navy
Future Infantry Soldier as a System (F‐ Multi‐Role Combat Aircrafts Aircraft Carrier
INSAS)
Unmanned Aerial Vehicles (UAV) Upgrade of Jaguar MIG‐27/ MIG‐29 Maritime surveillance aircraft
Upgrade of T‐72 Tanks/ ICV Mig‐29K (Fulcrum‐D) fighters Radars for Coastal Surveillance
Specialized Vehicles like Mine and
Protected vehicles
Fifth Generation Fighter Aircraft Diesel Submarines
Future MBT and Engine Device Hawk UAVs
155 mm Arty Guns, Field, SP Transport Aircraft Barak II
Helicopters, UAVs Surface‐to‐Air Missiles ATVs (nuclear subs)
Satellite Surveillance System Medium range surface‐to‐air missiles Short/medium range battlefield
surveillance radars
Battle Field Surveillance Radar
12
Main Battle Tanks

13. Indian defence industry Technology Requirements
Surveillance,
Combat
Advanced
Communicatio
High SEEKER
Technology
ns and
Navigation
Technologies
Rocket
Technology
Power
Laser
Generation
technology/
protection
Technology for
Hypersonic
P li
Trajectory
correction
system/missile
Miniature SAR
&ISAR
Sensors/
Detectors/
R d
Hypersonic
Propulsion
Propulsion y /
guidance
Radars
p
Miniaturization
/
Nanotechnolog
y
Thermal
imaging (TI) &
image
intensification
Shared &
Conformal
Apertures
Networking
technologies
for seamless
integration
System
simulators
13

14. Homeland Security Scenario Security Paradigm in India
Homeland Security market in India is spread across Central & State government spending and private security busines
The Home Land Security market which
currently ~ USD 8 billion (capital
Security installations for manufacturing
Border
Security
Airport
Security
stands at spend from government, private sector
and some part of export demand)
expected to grow to~ USD 16 billion per
year by 2018
hubs in sectors such as petroleum,
petrochemicals, and power is expected to
grow by 125%
Homeland Security:
Key Threats
Police
Modernization
Mass Transport
Security
Critical
Infrastructure
Security
Counter
Terrorism
Safe City
Maritime Surveillance
Central Government is likely to spend Security Total Security spending over USD 7.5 billion and State
Governments close to USD 2 billion on
police modernization
Transport in
India is expected to be over USD 5
billion by 2016
G Government of fI di India i d intends to l leverage h the bili i capabilities of f h the i private i d industry i in IT and d i i engineering d i design f for i
meeting
14
the needs of the homeland security
Source: ASSOCHAM & Aviotech Report on Homeland Security Assessment –India Expansion and Growth

15. Indian defense industry
Opportunities for participation in development
Geopolitical Perspective
• Sophistication of India’s arsenal lags
it regional rivals
Structural Perspective
• Very high dependence upon
imports
Opportunities
• India is embarking on
one of the worlds largest
d i d
g
• Increased threat perception from the
neighboring countries nexus
• Increased proximity to the western
economies
• Increased relevance in the economic
f
p
• Very high dependence upon
platforms of Russian origin
• Government owned defense
manufacturing industry has not
been efficient
P i d f f i
and most sustained
procurement cycles
• India has introduced
Defense Offsets and due to
it being one of the top
cycle of the world military spenders in the
• Private defense manufacturing
industry is just starting to take
off
world, the offset
obligation is a significant
opportunity that will need
to be addressed by the
expansion of private
defense manufacturing
15

16. Indian Defence Marketplace Key Players
Public Sector International Players
Private Players
IT / ITeS
companies
Undertaking in India
in Defence Sector
•Hindustan Aeronautics Limited
•Mazagon Dock Limited
•Bharat Electronics Limited
•Bharat Dynamics Limited
•Ordnance Factory Board
•Bharat Earth Movers Limited
•BrahMos Aerospace Private
•TATA Advanced Systems Ltd.
•Larsen & Toubro
•Ashok Leyland
•Godrej and Boyce Mfg. Co. Ltd
•Mahindra Defence Systems
•Pipavav Defence & Offshoring
Company
•LCorporationockheed
Martin
•General Electric
•Boeing
•Rockwell Collins
•Dassault Systems
•Northrop Grumman
•Tata Consultancy Service
•Infosys
•Wipro Technologies
•HCL
•Mahindra Satyam
•Geometric
•NeilSoft
Limited
•Mishra Dhatu Nigam
Limited (MIDHANI)
•ECIL
•Hindustan Shipyard Limited
•Ordnance Factory Board (OFB)
•Garden Reach Shipbuilders
p y
•Bharat Forge
•MKU Private Limited
•Alpha Design Technologies
•Anjani Thermoplast
•Dynamatic Technologies
•Kirloskar Pneumatic Company
•Honeywell
•EADS
•Raytheon
•Ness Technology
•Thales
•Finmeccanica
•SAAB
•Plexion
•QuEST
•eServ Perot
•Rolta
•KPIT Cummins
p
•& Engineers (GRSE)
•Goa Shipyard Limited
• India is emerging as a key outsourcing hub for global defense companies that are setting up exports and outsourcing bases
as long term strategies to serve global markets
•BAE Systems
•Eurocopter and Typhoon
•General Dynamics
•Paramount Group
16
long‐• India's proven expertise in outsourcing for a range of industries and areas requiring high competency levels are the key
factor encouraging these companies

17. Defence Offsets : Indian Perspective
17

18. Defence Procurement Procedure & Defence Acquisition Plans Overview
Expeditious decision making Simplification of Contractual
and financial provisions
Establish level playing
field – private
Aim – expeditious
Ship Building –
competitive basis
Expansion of scope of offsets
discharge
procurement, optimal
utilization of budgetary
resources, probity, public
accountability, transparence
in operations, free
competition and impartiality
15 Years Long Term Integrated Perspective Plan (LTIPP) formulated based on defense planning
guidelines in consultation with SHQ. Approved by DAC
Five Year Services Capital Acquisition Plan (SCAP) indicating list of equipment to be acquired, keeping
in view operational exigencies and overall requirement of funds. Approved by DAC
18
Annual Acquisition Plan (AAP) would be a two year roll on plan for capital acquisitions and would
consist of the schemes from approved five year Services Capital Acquisition Plan. Approved by DDP
Note: DAC : Defence Acquisition Council ; DDP : Department of Defence Production | Surceo: Ministry of Defence;, Govt. of India

19. Acquisition Categories
Capital acquisitions are categorized as under:
Make
Indigenous development to
meet complete requirement
Buy
Outright purchase of
equipments
Buy & Make
Import partial requirement and
produce balance in India
Buy (Global)
Both foreign &
Buy (Indian)
Only Indians can
Buy & Make
Global tenders are
i d i l i
Buy & Make
(Indian)
Only Indian bidders
Indian vendors can
bid
bid with min. 30%
local content
issued, partial quantity
bought and balance
produced in India
invited and equipment
to have min 50%
indigenous content
Make (DRDO)
Development of
strategic, complex
Make (High‐Tech)
High‐tech complex
systems with min 30%
Make (Low‐Tech)
Low‐tech mature
t ith i 50%
19
g , p
and security sensitive
systems by DRDO
y
indigenous content in
prototype
systems with min local content

20. Defence Offset Overview
• Offsets are compensatory, reciprocal trade agreements for industrial goods and services applied as a
condition of military‐related export, sales and services
• Globally, offsets have been implemented successfully to promote the domestic Defence industry and
support the setting up of critical technologies within the procuring nation
Defence Offset
Indirect Offset Direct Offset
Direct offsets require the supplier to purchase
goods or make investments which are related to
the sector of the primary transaction, there by
encouraging the growth of the domestic industry
in that specific sector
Indirect offsets obligate the supplier to purchase
goods or make investments from the purchasing
country which may be in certain stated sectors or be
entirely at the discretion of the vendor
The purpose is to stimulate economic growth in the
20
t at spec c secto e pu pose s st u ate eco o c g o t t e
vendor country more generally

21. India Defence Offset Categorization
Buy
i.e. Outright purchase from Indian or foreign
vendor
Buy and make with ToT
Purchase from foreign vendor followed by
licensed production
Offset
Offset obligation of 30% of contract value to be
discharged by
Direct purchase
from Indian
enterprises
Advanced
technology
acquisition by
DRDO
Equipment/
ToT to
government
institutions
Equipment to
Indian
enterprises
ToT to Indian
enterprises
FDI in Indian
enterprises
Multipliers permitted
• Minimum70% of total obligation
• Multipliers permitted for SMEs
21
• Banking allowed
Source: Ministry of Defence, Govt. of India

22. Defence Offset India Scenario: Policy Intervention
Defence
Procurement
Procedure (DPP)
and offset
p p p g p y
■ Defence procurement is governed by the DPP.
■ The DPP governs all Capital Acquisitions undertaken by theMoD, Defence Services and Indian Coast Guard
■ Its aim is to incorporate procedures to expedite decision‐making, simplify contractual and financial
provisions, and establish a level playing field for the public and private players
guidelines
■ The offset policy is a part of the DPP and has undergone revisions with the DPP
■ The policy stipulates an offset requirement of a minimum 30% for Offset policy procurement of Defence equipment in
excess of USD 49.2 million
■ Under the Industries (Development and Regulation) Act 1951, an industrial license (IL) is required for
manufacturing Defence equipment
■ The applicant must be an Indian company or partnership and has to apply to the Department of Industrial
Industrial
licensing policy
Policy and Promotion (DIPP)
■ FDI up to 26%is allowed in an Indian companymanufacturing Defence equipment, subject to the company
Foreign Direct
Investment (FDI)
policy Promotion Board (FIPB) in the Ministry of Finance
obtaining an IL from the DIPP
■ The approval is given by the government through an application filed before the Foreign Investment and
■ The import and export of Defence equipment is governed by the Director General of Foreign Trade (DGFT)
in the Department of Commerce
■ Barring some specific items Defence equipment can be exported either after obtaining a license from the
Foreign trade
policy
22
items, DGFT for items in the SCOMET list or after obtaining a NOC from the Ministry of Defence
Source: Ministry of Defence, Foreign Investment Promotion Board

23. Offset Policy India Scenario: Policy Intervention
The key objectives of the Defence offset policy are to leverage capital acquisitions to
develop the Indian Defence industry by:
Fostering development of internationally competitive enterprises
Augmenting capacity for research, design and development related to Defence products and services
Encouraging development of synergistic sectors like civil aerospace, and internal security
Key Features:
Infusing greater efficiency in the procurement process
Strengthening the Defence manufacturing base in the country
Clarifications on the acquisition
Objectives of DPP 2013
Enhancing indigenization
Encourage Value addition within the country
Reducing processing time
Progress self‐ reliance a 23
towards self in sustained manner inclusive of Technological growth
Implementation to bring about increased opportunity for Indian industry
Source: Ministry of Defence, Govt. of India

24. Salient Features of Defence Procurement Procedure‐ 2013
Stronger impetus to indigenization
The Defence Procurement Procedure 2013 aims to balance the competing requirements of expediting capital procurement, developing a
robust indigenous Defence sector and conforming to the highest standards of transparency, probity and public accountability
Prioritisation of ‘buy (Indian)’ and ‘buy and make (Indian)’ for capital acquisitions under
defence procurement procedure
Maintenance ToT (MToT) will no longer be through nomination but through bidding
Ad l i f ‘ k ’ d
Defence
Advance consultations for make’ procedure
Simplification of ‘buy and make (Indian)’ procedure
DPP 2013 clearly focuses on
creating a conducive
environment for achieving
indigenization by stipulating
Procurement preferred categori ation for
Procedure 2013
Clear definition of indigenous content
categorization buy (Indian), buy and make
(Indian), make categories
and allowing the private
industry to participate in
maintenance transfer of
Ensuring faster progress in ‘make’ and ‘buy and make (Indian) cases
Enhanced delegation of financial powers for capital acquisitions
technology (ToT) thereby
providing a level playing
field to it with foreign OEMs
and DPSUs
24
Powers to DAC to approve all deviations from DPP
Source: Ministry of Defence, Govt. of India

25. Defence Offset India Scenario:
Methods of discharge of Offset Obligations
Indian offsets policy provides a powerful investment driver,
but could benefit from greater focus and direction
• A major Direct Purchase
Direct purchase of products/services provided by
the Indian Defence industries, i.e. DPSUs, OFBs and
the private Defence industry
change introduced in DPP 2008 was to allow
foreign vendors to bank offset credits
• The concept of multipliers in offsets is used by many
countries around the world to encourage the inward
investment of sought‐after technologies into targeted
Market Share
D f P bli
Offsets Credit
• Credit based on creation of offset programmes
created in anticipation within two financial years
before the issue of RFPs
sectors
43%
24%
Defense Public
Sector Units
Large Industries
Direct FDI
• Direct FDI in Indian Defence industries for
industrial infrastructure for services co
–
33%
SMEs
services, development, JV and co‐production of Defence
products and components
• Direct FDI in Indian organizations engaged in R&D
as certified by the Defence Offset Facilitation
A (DOFA)
25
Agency Source: KPMG, UKIBC

26. Indian Offset Contracts Value & Share
• The offset policy was introduced in 2005 and the first offset contract was signed in 2007 US companies
have signed offset contracts worth over USD 2 billion, while French companies have signed contracts
worth USD 1 billion
• Till date offset contracts worth USD 3.2 billion mainly in manufacturing, infrastructure, engineering
design, development & testing, and simulators have been signed with Indian offset industry
OFFSET CONTRACTS (COUNTRY, VALUE IN
USD MILLION, PERCENTAGE SHARE) Year wise Offset Contract Value (in USD million)
I l
Russia
713
17%
Italy
334
8%
Israel
130
3%
1010
1684
1800
1600
1400
1200
1000
e (in USD million)
USA
2054
48%
54
768
207
386
800
600
400
200
Offset Contract Value
France
1046
24%
0
2006 2007 2008 2009 2010 2011 2012 2013
Year
26
Source: Ministry of Defence, Govt. of India

27. Defence Offset India Scenario ‐ 2020
• With perceived threats and an recovering economy, defence spending to increase substantially
• Present Offset Opportunity is estimated at USD 5 bn
• Offset opportunity expected to rise to USD 12 billion over next 3 years and USD 4‐5bn per year thereafter
• Greater private sector participation in defence, to be in favour of Indian companies
• 55% of offset contracts are taken by the private sector
• Indian Aerospace and Defence industry is emerging as outsourcing hub for many services like CAD,CAM and CAE,
manufacturing and design engineering, testing and integration, and technical publications
120
100
84
92
102
Estimated defence spend over next decade (2012‐2020)
80
60
40
41
47
55
62
69
76
27 9 31.7 35.7 39.5 45.1
51
SD Billion
20
0
16.6 20.2 24.2 27.9
2012 2013 2014 2015 2016 2017 2018 2019 2020
U
27
Defense Expenditure (USD billion) Capital Expenditure (USD billion)
Source: KPMG Analysis, UKIBC

28. Advantage Gujarat : Leveraging Opportunities to create capabilities
in Defence and Homeland Security manufacturing
Gujarat has emerged as a state with
excellent infrastructure facilities and
can offer both forward and backward
supply chain linkages to the Defence
offset 28
and homeland security
equipment manufacturing sector

29. Defence Offset Gujarat Scenario: Growth Drivers
With skilled intensive manufacturing capabilities and a robust infrastructure, Gujarat has the right ingredients
to become a key link in the Indian Defence supply chain
Gujarat’s Small and Medium
engineering companies will play a
critical role in the entire supply
chain for the Aerospace and
Defence sector
Gujarat, with a coastline of 1600 km
is well connected to all the major
port‐based trade routes and acts as
a Gateway to the rich northern and
central hinterland of India
Strong Manufacturing
& Engineering base
with presence of
MSME’s across the
value chain
h
Robust Physical
Infrastructure
Proactive
Governance
Growth
Drivers
World Class Ship
building &
repairing
facilities
Availability
of highly skilled
manpower Gujarat has good educational
structure with premier institutes
in management, engineering &
technology, design, infrastructure
l i d
Alang and Sosiya are Asia's biggest
Ship Breaking Yards. Pipavav
Shipyard owned by Pipavav Defence
& Offshore Engineering Company
d i ld l hi ildi
29
planning and
R &D
Source: INDEXTB
Ltd is a World Class Ship Building
facility

30. Gujarat India’s Manufacturing Hub
Gujarat has a plethora of companies manufacturing precision engineering
goods which can be further aligned with the Defence offset sector’s requirement
Gujarat aims to target 35% of the possible Defence Offsets to be sourced from India
Contribution of Manufacturing
28 21
Sector in GSDP
The number of
factories in Gujarat
have increased from
15576 in 2009‐10 to
28.02
%
27.57
%
28.21
%
Secto GS
CAGR of
investments in
21282 in 2010‐11(P),
showing a growth of
36.63 percent
27.16
%
Manufacturing sector
contributes 26.7 % to in
Gujarat’s GSDP i.e.
~ INR 163,195 crore (USD
26.8 billion)
manufacturing
sector in last 6
years ~ 19%
2008-09 2009-10 2010-11 2011-12
(at current prices) in
2011‐12
To leverage on Gujarat’s industrial sector comprises 0.45 million
the progressive industrial sector of the state,
30
g p g ,
the government has initiated a “Cluster Development
Scheme” to promote and strengthen the MSME sector
Gujarat s of over Micro, Small and Medium Enterprises providing
employment to ~ 2.5 million people (as on 31/12/2012)
Sources : CMIE, ASI 2010‐11 , Socio‐ Economic Review : Gujarat 2012‐13

31. Engineering Industry Gujarat Scenario:
Presence across value chain
Heavy
engineering
Heavy
electrical
Heavy
engineering
and machine
tools
Automotive
• Boilers
• Turbines and generator sets
• Transformers
• Switchgear and control
gear
• Textile machinery
• Ceramic machinery
• Sugar machinery
• Rubber machinery
• Passenger and utility vehicles
• Auto components and auto
ancillaries
• Material handling equipment
• Oil field equipment
• Metallurgical machinery
• Dairy machinery
• Earth moving and construction
machinery
• Agricultural machinery
31

32. Engineering Industry Gujarat Scenario:
Presence across value chain
Light
engineering
Low technology
products
High technology
products
Plastic
Machineries
• Roller bearings
• Welding equipment and
consumables
• Casting and • Medical and surgical instruments
• Process control instruments
• Domestic appliances
• Injection moulding
• Extrusion
• Blow moulding
forging
• Pipes and tubes
• Fasteners
• Reprocessing • Electronics
• Extrusion coating
32

33. Engineering Industry Gujarat Scenario:
Industrial Infrastructure & Government Interventions
To capitalize on the emerging opportunities and for providing a thrust to the defence sector in Gujarat, the
state government is planning to set up an exclusive SEZ for defence supply industries
5 precision engineering clusters proposed in
Jamnagar, Halol, Sanand, Lodhika, Mandal –
these clusters will be developed by GIDC
Units coming in these clusters will be provided
single window clearances and streamlined &
hassle‐free procedures for obtaining various
approvals
Kutch
h d b d
Kheda
Anjar
The benefits of existing industrial park scheme
will be extended to the tune of USD 3.2 million
Dahod
Amreli
Ahmedabad
Vadodara
Surat
Changodar
Dholera
Hazira
Okha
Navlakhi
Pipavav
Government to identify and provide large tracts
of land for specialized trials of equipment
Development of 49 Skill Upgradation Centers
has been completed & 22 have been
Simar
operationalized50 new Skill Upgradation
Centers within GIDC estates planned
Siemens PLM Software India Pvt Ltd will set up 5
Centres of Excellence in Gujarat for diverse industry
segments like automotive, industrial machinery,
Particular Units Symbol
Special economic zones 5
Special investment regions 9
33
g , y,
industrial automation, aerospace and defence, and
Source: GIDC
shipbuilding DMIC influence area

34. MSME’s will play a vital role in creating Gujarat as a Defence Industrial Bas
Gujarat’s fundamental strength exists in form of a large
number of MSME’s, who are transforming themselves
into major players and will play a critical role in the
34
entire supply chain execution for the Aerospace and
Defence sector

35. Defence Offset Gujarat Scenario:
Role of MSME’s in creating Defence Industrial Base
MSMEs play an important role in the local and global supply chain of any major defence integrator as key outsourced
suppliers. Most large companies use MSMEs to deliver significant parts of their projects
• Gujarat has 83 identified MSME clusters
• Gujarat stands 1st in terms of the asset base of the MSME sector, according to the Fourth Census of MSMEs
• State ranks 1st in integrated overall performance of MSMEs at National Level, as per ISED Small Enterprise
Observatory
• Micro and Small Enterprises ‐Cluster Development Program (MSE‐CDP) is being implemented for holistic and
integrated development of micro and small enterprises in clusters
Total SSI + MSME in Gujarat till 2013: ~5 00 000
Proactive
Governance
5,00,000
Total investment under MSME, between FY 2010‐11
and FY 2013‐14, stood at INR 48255.86 crore (USD
7695 million) creating 11,05,172 jobs
Out of the total number of working
enterprises, 56.13% are located in the clusters
with an employment Contribution of 48.92% of
35
the total MSME employment
Source: iNDEXTb, Industries Commissionerate, Government of Gujarat

36. Defence Offset Gujarat Scenario:
Role of MSME in creating Defence Industrial Base
With MoD setting itself a goal of sourcing 70% of all equipment from Indian
companies–public and private sector ‐ by 2020 which could provide a boost to MSMEs
MSME’s will play a vital role in
following areas of Defence Sector:
• Research & Development
M i t R i & O ti
Gujarat’s MSME’s can
leverage their strengths in
niche technology areas of
• Maintenance, Repair Operations f
• Software Development
• Casting, forging and metal works
• Naval systems, subsystems and
accessories
• Land Defence Sector:
• Leverage their strength of
innovation, low economies of
scale & innovation to attain
elusive Self‐Reliance
systems, subsystems and
accessories
• Aerospace: sub systems and
accessories, ground equipment Proactive
and
tooling
Governance
• IT hardware and electronics
• Leverage strength in IT and
automotive industry to take
Design, Engineer and
manufacture defence &
aerospace products
L l b l hift f
• Leverage global shift from
vertically integrated
manufacturing to design and
Proactive Governance integration using local strength
• Gujarat’s Small and Medium engineering companies will play a critical role in the entire supply chain for the Aerospace and
36
Defence sector
• Collaboration of large business houses with Gujarat’s SME’s and MSME’s, can help transform Indian Aerospace & Defence
eco system into a robust sector and create a mark on international stage

37. Government Initiatives for MSMEs
Venture Capital and
Patent Assistance
Interest subsidy on
Eligible parameters
Development
Cluster in PPP mode
Awards to best
MSMEs
Integrated
Industrial
Infrastructure
Assistance in
Quality
Certification, Skill
Enhancement and
Technology
Support for Vendor
Development
acquisition
37

38. Gujarat’s World Class Shipbuilding
Industry for building new age Warships
38

39. Gujarat Harnessing port infrastructure for Ship Building
Gujarat, is expected to harness huge investment in the Shipbuilding Sector The State Government along with
Maritime Board (GMB) is committed to develop the industry and utilize all the competitive advantage of its po
Gujrat Maritime Board (GMB) is
promoting Marine Shipbuilding Parks
(MSP) at multiple locations with
Naval Ship
Building Ship
private player participation
Gujarat boasts of 60% share of the Repair
Gujarat’s
Ship
Building
Opportunities
Indian shipbuilding order book and is
targeting a capacity of 3 million DWT
Amphibian
aircraft*
Ship
Recycling
Gujarat has one of the world’s largest
ship recycling yards at Alang
39
The high‐flying Shipbuilding cluster
being developed is ‘Dahej Shipbuilding
cluster’

40. Gujarat Leveraging resources for building modern Warships
Alang located on the western coast of Gulf of Cambay, in the western part of India, is the largest ship‐recycling yard in
Japan and the Gujarat government have joined hands to upgrade the existing Alang shipyard to make it the largest In
Maritime Organization‐compliant ship recycling yard in the world
Gujarat’s State‐of‐the‐art Shipbuilding
infrastructure can be used for
construction of a wide
range of warships and submarines
Presently, Gujarat has nine shipbuilding
yards in operation, three under the
Nana Laija
process of approval . Gujarat Maritime G j t
p pp j
Board (GMB) has envisaged for thirteen
more notable shipbuilding projects.
The infrastructure in Gujarat
Gujarat
Ghogha Dahej
Bedi
Jodiya Ratanpur
existing h
makes it ideal for dry dock,repair
maintenance, support services &
emergency refits
Pipavav
Jafrabad
Mahua
Bhavnagar
Velan
Magd
Billim
Dhola
40
There are around 50 Gujarat based SME’s
that currently supply components' to ship and
submarine building companies like Pipavav
Defence and L&T
Locations of Marine Shipbuilding Parks (M

41. Gujarat Homeland Security Scenario
Homeland Security in India has witnessed an increasing focus in the recent past.
Opportunities:
• A significant market opportunity exists in sever
domains comprising of the larger Homeland
Security sector such as police modernization, c
.
• The homeland security equipment manufacturing,
which involves a lot of advanced technologies,
also offers a great opportunity for the State based
infrastructure protection and counter‐terrorism
activities
• Expected opening up of nuclear sector post sig
of the Civil Nuclear Cooperation Treaty with th
i lik l t t l d df
g pp y
SMEs which are ready to align themselves with
the latest technologies
• Gujarat with its well established Technical Textiles,
Nanotechnology, and Science & Technology can
contribute immensely in emerging defence and
is likely to create a large demand for
Nuclear/Radiological Threat Mitigation approa
• Biometric identification systems and similar sm
ID documents are expected to present a large
opportunity
homeland security areas like:
• Textile technology
• Nanotechnology, composite material and metal research
• Night vision
• Electronic miniaturization
• Defensive systems in satellites
• Cyber warfare
41

42. Gujarat Educational Infrastructure and Skilled Manpower Availabilit
Number of Degree
Engineering Colleges,
Number of Seats in
Gujarat Gujarat, 2013 g Degree g Engineering
g • At the end of , 2013, j Gujarat is p j
projected to
8,970 Colleges, Gujarat, 2013
1,194
16 3 540
2
intake capacity of 60,883 degree stu
engineering
• More than 3,060 seats have been added
alone along with 4 new engineering col
institutions
95
50,17
9
Government Colleges
Grant‐in‐Aid Colleges
PPP Colleges
Self Financed Colleges
• The tally leads for Mechanical Engineering
230 seats, followed by Civil, Electrical and
Gujarat Forensic Science University established by
the Government of Gujarat, under the flagship of
Home Department ‐ Government of Gujarat
18000 (16230)
2010
2012
Mechanical
Engineering
Seat Matrix Year‐Wise
Ci il
• It is the only university across the world, dedicated
to Forensic & Investigative Science
16000
14000
The Government of Gujarat has established “RAKSHA
SHAKTI UNIVERSITY” vide ‘The Raksha Shakti
12000
University Act, 2009’ 10000
(9950) (9839)
(8160)
(7080)
Civil Engg.
Electrical
Engg.
Computer
Engg. Electronics
& Comm. Informa
Technol
42
• The Raksha Shakti University is a unique and first of
its kind in India for conducting certificate, diploma
and degree courses in the field of police science
and internal security
8000 6000
4000
2000
0
(3555)

43. Doing Business In India
43

44. Snap Shot of Investment Cycle
Li
B
Entry Options
Br
P
Exit
Strategy
Repatriation
Buy back
Divid
Intere
Roy
Sale of shares
Listing
Liquidation Fees for
44

45. Entry Options Permissible Activities
Particulars Liaison Office Branch Office / Project Office Joint venture / WOS LLP
• Acts as channel of • BO / • Any • A hybrid structu
communication
between HO and
parties in India
• Representing the
PO is a mere extension of a
foreign company and for all practical
purposes is treated as a foreign
company in India
Branch Office
• Export/ Import of goods
activities permitted
by India’s Foreign Direct
Investment Policy
separate busine
vis‐à‐vis design
partners with p
succession
parent company/group
companies in India.
• Promoting exports
/imports from/to India.
• Promoting
t h i l/fi i l
• Rendering professional or consultancy
services
• Research work, in which the parent
company is engaged
• Promoting technical or financial
• Sectors/activitie
100% FDI is allo
through autom
route and there
FDI‐linked perfo
related conditio
Permissible
Activities
technical/financial
collaborations
between parent/group
companies and
companies in India.
collaborations between Indian
companies and the parent company
• Representing the parent company in
India and acting as buying/ selling
agents in India
•• Rendering services in Information
Technology and the development of
software in India
• Rendering technical support to the
products supplied by the parent/ group
companies.
45
Project Office
• A foreign company may be permitted
to open a PO in India provided it has
secured from an Indian company, a
contract to execute a project in India.

46. Tax Environment in India
Taxes in India
Indirect tax
Income tax C t d t
Securities transaction
Direct tax
I t
Levies on transactions
S iti t ti
Customs duty
Sales Tax/ Value
Added Tax (‘VAT’)
Wealth tax tax
Stamp duty
Service tax
Excise duty
Octroi/ Entry tax
R&D Cess
46
Direct and Indirect tax regimes are being overhauled; to be replaced with
Direct Tax Code (‘DTC’) and Goods and Services Tax (‘GST’) in near future

47. India Tax rates
• No Consolidation Rule, No Thin Capitalization Rules and No Controlled Foreign Companies Rules
− Anti‐abuse provisions :GAAR to applicable from financial year 2015‐16
• Transfer pricing regime in existence – APAs mechanism in place
• Advance Ruling possible for taxation issues of Non‐ Residents
•• Double taxation avoidance agreements with around 85 countries of the world.
• Wealth Tax at 1 % on aggregate taxable value exceeding INR 3 Million
• Securities transaction tax at 0.1% on the sale and purchase of equity shares listed on the stock exchange.
• Commodities transaction tax at 0 0.01% 01% on commodities transactions
Corporate Taxes Indian Company Foreign Com
Corporate Tax 33.99% 43.26%
Minimum Alternate Tax (MAT) 20 20.96% 96% 20 20.01%
01%
Dividend Distribution Tax (DDT) 16.995% Nil
Buy Back Tax (BBT) 22.66% Nil
Long Term Capital Gain Tax 22.66% 21.63%
47
g p
Short Term Capital Gain Tax 33.99% 43.26%
Withholding tax in royalties / fees for services 25%
Withholding tax on interest 20%

48. Indirect Tax Regime
Indirect Tax Regime
• Indirect Taxes at Central level –
• Excise duty on manufacture of goods – 12% (plus education cess and higher education cess)
• Service tax on services except covered under negative list – 12% (plus education cess and
higher education cess)
• Custom duty to be paid on import of goods – 28% (plus education cess and higher education
cess)
• Central Board of Excise and Customs (‘CBEC’) deals with the formulation, implementation and
administration of Customs & Central Excise duties and Service Tax Laws.
• VAT / GST at state level
• Central sales tax on interstate sale of goods at 2% or the prevailing state value added tax of
48
g p g
selling state, as the case may be
• Credit of the indirect taxes paid also available to avoid any cascading effect

49. Tax Exemption for Defence Services / Technology
Tax exemption under section 10 (6C)
Royalty / Fees for
Technical Services
Agreement between GOI & Foreign
Company for security of India
Exemption notified by G
the official Gazette of I
Exemption not available
49
For supply contract – profits arising to Foreign
Enterprise on account of supply of equipment
could be taxable in India if Foreign Enterprise
has a PE in India

50. Defence Offset India Tax Regime
The fiscal regime plays a critical role in any Defence market in creating an environment t
incentivizes and supports the long term risk taking, pp g g investment and R&D required by the ind
Indirect Tax Regime
• Indirect tax laws provide various exemptions and
concessions applicable in the Defence sector
• Various exemptions and concessions from payment of
Customs duty (on imports) and Excise duty (on
domestic manufacture) of capital goods, machinery,
equipment, spares, tools etc. for use by the armed
forces and Defence sector
• A tax exemption is available on royalties and fee for
technical services under ‘Buy and Make with ToT’
category procurements
• R&D Cess is chargeable at the rate of 5 % on import of
technology in India under a foreign collaboration
A bl i i l d i h T T
50
• Any taxable services involved in the ToT agreement
would attract Service tax at applicable rates

51. Annexure
51

52. Defence Offset Glossary
APAC Asia‐Pacific
DRDO Defence Research and Development Organization
FDI Foreign Direct Investment
GIDC Gujarat Infrastructure Development Corporation
GSDP Gross State Domestic Product
PPP Public Private Partnership
SMEs Small and Medium Enterprises
52
ToT Transfer of Technology

53. Defence Offset Joint Ventures (1/4)
Entity Involved Details
HAL, SNECMA of
France
• HAL and SNECMA of France signed an agreement to form a JV that would be a ce
excellence for the manufacture of key components and assemblies of aero engine
HAL would bring its manufacturing experience in India, SNECMA would
technology to the JV, providing HAL additional export avenues and greater access
aerospace industry.
Lockheed Martin,
Wi T h l i
• Lockheed Martin of the US, the world’s largest defense manufacturing compa
Wipro Technologies of India, together announced opening of a Network Operation
in Gurgaon, near New Delhi. Known as “Ambar Jyoti”
• This lab will develop, demonstrate and experiment with emerging network
Wipro Technologies
of India
p, p g g
capabilities and applications.
• Lockheed Martin and Wipro will utilize cutting‐edge technologies and real enviro
emulation to develop net‐enabled capabilities and solutions to employ against
real world problems.
Boeing, Tata
• Boeing and Tata utilizes existing Tata manufacturing capability and also develo
supply sources throughout the Indian manufacturing and engineering commun
both commercial and defense applications.
• Manufacturing capabilities established within the joint‐venture company would
phases be leveraged across multiple Boeing programs including the Medium Mu
53
programs, Combat Aircraft competition
• This involved USD 500 million of defense related aerospace component work

54. Defence Offset Joint Ventures (2/4)
Entity Involved Details
• French defense and aerospace major Thales and Samtel group announced a joint v
Thales, Samtel
p j g p j
to design, manufacture and sell avionics systems in the Indian market.
• Samtel and Thales would hold 74:26 in the venture that was started with a capital
12.5 million with more investments to be pumped in as the joint development
would progress
TCS, SAAB
• IT services provider Tata Consultancy Services (TCS) announced its partnership wit
a provider in products and services catering to military and civil security, f
establishment of Saab’s Aeronautical Design and Development Center (ADDC) in In
L&T, DRDO • Larsen & Toubro (L&T) tied up with DRDO to setup a research facility for w
conceptualization for all commercial production under‐taken by DRDO
• Dassault y Systèmes ( ) DS) the world leader for Product y Lifecycle Man‐g
agement
D Dassault ltS t Systems,
KPIT Cummins
Infosystems Lt
software solutions and KPIT Cummins Infosystems Ltd a specialist solutions part
global manufacturing corporations, signed a go‐to‐market partnership for joint solu
business devel‐opment on ENOVIA Platform
Wipro, GE Security • Wipro forged a JV with GE Security of US during to jointly produce and market p
54
security solutions for Indian defense forces

55. Defence Offset Joint Ventures (3/4)
Entity Involved Details
TAAL,TIDC
• Bangalore based Taneja Aerospace is planning to float a joint venture with T
Nadu owned TIDCO to create a new facility at Hosur, manu‐facture aero parts
would exploit opportunity in the MRO
HAL, CA • HAL and Canada’s CAE jointly set up a new helicopter training centre
• SAERTEX, the world leader in non‐crimp glass, carbon and aramide fabrics, pla
to set up a 50:50 Joint Venture company in India with KEMROCK Industries
SAERTEX, KEM‐ROC
Exports Limited, Vadodara, Gujarat; and accordingly, an MOU was entered int
and between SAERTEX and KEMROCK to form the JV.
• The joint venture named as SAERTEX‐KEMROCK INDIA LIMITED, would set up a
facility for producing various components for Indian and global aeronau
industry
Sikorsky, Tata Advanced
System
• Sikorsky signed a joint venture with Tata advanced Systems in to pro‐duce cabin
the S‐92 helicopter and aerospace parts in Hyderabad
55
Airbus, Airspace
Infrastructure Pvt.Ltd ,
Airlogic Ltd
• Airbus, Airspace Infrastructure Pvt. Ltd and Airlogic Ltd have estab‐lished a
spare parts and logistics support joint venture ‐ Spares Support Solutions India,
Ltd. (SSSI).

56. Defence Offset Joint Ventures (4/5)
Entity Involved Details
Wipro, CA
• Wipro signed an agreement with CAE in to provide simulation‐based train
areas like war gaming, C4ISR and a range of defense plat‐forms expected
acquired by India’s defense forces.
• The two companies also agreed to help original equipment manufacturers me
set obligations in India that are required by defense ministry.
BEL, Suriname Armed
Force
• BEL signed a contract with Suriname Armed forces for delivery of
communication system network server
Rolls Royce, HAL
Rolls Royce and HAL forged a 50:50 joint venture to manufacture compressor shro
rings and construction of a new production facility that would incorporate the late
modern manufacturing techniques
M&M Ltd, BAE
Mahindra & Mahindra Ltd and BAE forged a JV to develop strike vehicles for India
Army. M&M owns 74 % equity and BAE owns 26%
56
L&T, Cassdian
Government altering its current foreign direct investment (FDI) limit in the defens
sector from 26% to a higher percentage

57. Defence Offset Joint Ventures (5/5)
Entity Involved Details
• Agusta westland and Tata Sons Ltd signed to create a Joint Venture with d
which would be concentrating on assembly work of AW119 helicopter for
Agusta Westland, Tata
Sons Ltd
worldwide market, with a production rate of 30 a year and the first air
potentially ready for delivery in 2011.
• The AW119 would be proposed to Indian military Reconnaissance and Surveill
Helicopter program.
Larsen & Toubro,
Europe's EAD
• Announced the formation of a joint venture company for defense electroni
India aim at development, design, manufacturing and related services in the f
of electronic warfare, radars, military avionics and mobile systems for mi
requirements
57

58. Defence Offset List of Products and Services
Eligible for Discharge of Offset Obligations
Defence Products
• Small arms mortars cannons guns howitzers anti arms, mortars, cannons, guns, howitzers, tank weapons and their ammunition including fuzes
• Bombs, torpedoes, rockets, missiles, other explosive devices and charges, related equipment and accessories
designed for military use, equipment specially designed for handling, control, operation, jamming and detectio
• Energetic materials, explosives, propellants and pyrotechnics
• Tracked and wheeled armoured vehicles, vehicles with ballistic protection designed for military app
armoured or protective equipment
• Vessels of war, special naval systems, equipment and accessories to include following: ‐
 Design, manufacture or upgrade of weapons, sensors, armaments, propulsion systems, machinery
systems, navigation equipment/instruments other marine equipment and hull forms of warships, sub
auxiliaries
 Facilities and equipment required for testing, certification, qualification and calibration of hull forms, p
propulsion and machinery control systems, weapons sensors and related equipment including enhance
stealth features and EMI/EMC studies for warships, submarines and auxiliaries
 Software specially designed, developed and modified for design of all types of warships, submari
auxiliaries or their hull forms
 Setting up of maintenance and repair facility for equipment/weapons and sensors and other marine
including related technical civil works.
• Aircraft, unmanned airborne vehicles, aero engines and air craft equipment, related equipment specially des
modified for military use parachutes and related equipment
58
use, • Electronics and communication equipment specially designed for military use such as electronic counter
and counter measure equipment surveillance and monitoring, data processing and signalling, guida
navigation equipment, imaging equipment and night vision devices, sensors

59. Defence Offset List of Products and Services
Eligible for Discharge of Offset Obligations
Defence Products
• Specialized equipment for military training or for simulating military scenarios, specially designed simula
of armaments and trainers and training aids viz. Simulators, associated equipment, software and comp
training modules
• Forgings, castings and other unfinished products which are specially designed for products for military a
and troop comfort equipment
• Miscellaneous equipment and materials designed for military applications, specially designed environ
facilities and equipment for the certification, qualification, testing or production of the above products
• Software specially designed or modified for the development, production or use of above items. Th
software specially designed for modeling, simulation or evaluation of military weapon systems, m
simulating military operation scenarios and Command, Communications, Control, Computer and Intell
applications
• High velocity kinetic energy weapon systems and related equipment
• Direct energy weapon systems, related or countermeasure equipment, super conductive equipment a
designed for components and accessories.
Products for Inland/Coastal Security
• Arms and their ammunition including all types of close quarter weapons
• Specialized Protective Equipment for Security personnel including body armor and helmets
• Vehicles for internal security purposes including armoured vehicles, bullet proof vehicles and mine
hi l
59
vehicles
• Riot control equipment and protective as well as riot control vehicles
• Specialized equipment for surveillance including hand held devices and unmanned aerial vehicles
• Equipment and devices for night fighting capability including night vision devices

60. Defence Offset List of Products and Services
Eligible for Discharge of Offset Obligations
Products for Inland/Coastal Security
• Navigational and communications equipment including secure communications
• Specialized counter terrorism equipment and gear, assault platforms, detection devices, bre
gear etc
• Specialized equipment for Harbor Security and Coastal Defence including seabed/ma
surveillance sensor chains, sonar's, radars, optical devices, AIS
• Vessel Traffi c Management Systems (VTMS/VATMS) and appropriate vessels/crafts/boats
• Miscellaneous maritime equipment for undertaking investigations, Boarding, Search and Seiz
ships/vessels
• Software specially designed, developed and modified for all types of Coastal and Maritime se
domain awareness, operations and data exchange
Services (related to eligible products)
• Maintenance, repair and overhaul
• Up gradation/life extension
• Engineering, design and testing
60
g g, g g
• Software development
• Quality assurance
• Training
• Research and Development services (from government recognized R&D facilities)

61. Defence Offset Critical Defence Technology Areas and Test facilities
Li t f C iti l D f List of Critical Defence Technology Areas and Test facilities for Acquisition by DRDO through Offse
reviewed periodically) Critical Technology Areas Navigational and communications equipment
secure communications
• MEMs based sensors, actuators, RF devices, Focal plane arrays
•• Nano technology based sensors and displays
• Miniature SAR & ISAR technologies
• Fiber Lasers Technology
• EM Rail Gun technology
•• Shared and Conformal Apertures
• High efficiency flexible Solar Cells technology
• Molecularly Imprinted Polymers
• Technologies for Hypersonic flights (Propulsion, Aerodynamics and Structures)
•• Low Observable Technologies
• Technologies for generating High Power Lasers
• High Strength, High‐modulus, Carbon Fibers, Mesosphere pitch‐based fibre, Carbon Fiber P
Facility
• Pulse power network technologies
61
• THZ Technologies

62. Defence Offset Definition of Micro, Small and Medium Enterprise
Defifinition of Micro, Small and Medium Enterprise:
a. In the case of enterprises engaged in manufacture of goods:
• Micro enterprise is that where investment in plant and machinery does not exceed INR
• Small enterprise is that where investment in plant and machinery is more than INR 2.5
does not exceed INR 50 million
• Medium enterprise is that where investment in plant and machinery is more than INR 5
but does not exceed INR 100 million
b. In the case of enterprises engaged in providing services:
• Micro enterprise is that where investment in equipment does not exceed INR 1 million
• Small enterprise is that where investment in equipment is more than INR 1 million but d
exceed INR 20 million
• Medium enterprise is that where investment in equipment is more than INR 20 million
62
not exceed INR 50 million

63. Organized By Knowledge Partner National Partner
Visit us at www.vibrantgujarat.com
63