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.
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."