15:59 GMT19 January 2021
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    India will turn to its private sector to procure ammunition, as a state-sponsored organization cannot keep up with demand and importing the materials will no longer be an option.

    The Indian Ministry of Defense (MoD) plans to allow the country's private sector to start manufacturing ammunition to fill orders which cannot be delivered by the state-owned Ordnance Factory Board's (OFB) production capabilities, according to Defense News.

    Previously, the Indian private sector was allowed only to manufacture certain elements of ammunition, such as the shell or the fuse. Now private manufacturers will be allowed to obtain a license to manufacture and market a full range of ammunition.

    According to a senior MoD official, the OFB's low production capacity created a need for increased production.

    "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," the MoD official detailed.

    India's vast private sector will partner with foreign weapons manufacturers to improve targeted economies of scale. According to Defense News, a number of global weapons manufacturers, including Russian Rosoboronexport, are currently negotiating with Indian companies. One such Russian joint project has been announced by BF Elbit Advanced Systems Private Limited, a subsidiary of the Kalyani Group, one of the largest private industrial firms in India.

    Government interest in outsourcing ammunition production is increasing. A recent request for information (RFI) covers a program to manufacture a variety of ammunition, from 40 mm grenades to Grad multiple launch systems rockets, worth some $400 million, almost half of the current Indian ammunition market, estimated at some $1 billion. Currently the demand is fulfilled by OFB and imports from abroad.

    Bhupinder Yadav, a retired Indian Army major general and defense analyst, estimates the possible private sector share at only about $250 million.

    According to Ankur Gupta, a senior defense analyst with Ernst & Young India, there is a lot of work to be done before the private sector ammunition market can be viable.

    "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," he 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."


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