The Strategic Electronics sector presents an unprecedented opportunity as well as a challenge. All modern warfare systems, including fly by wire, avionics,
telecommunications, sonar systems, navigation and surveillance depend heavily on electronic systems. The production of strategic electronics in India has been growing
steadily from Rs 5700 crores in 2007-08 to Rs.9000 crores during 2009-10. As per projections, electronics production in defence sector in India is likely to reach
Rs.15,000 crores during the current financial year.
This growth is fuelled by the expanding budgetary allocation for defence sector which grew by about 12% from Rs. 147,344 crores in 2010-11 to Rs. 164,415 crores in
2011-2012 and further by 17% to Rs 193,407 crores in 2012-13. Of this, Capital expenditure, which mostly caters for modernisation requirements, accounted for Rs. 69,199
crores in 2011-12 and is budgeted at Rs 79,579 crores in 2012-13. The Defence Procurement Procedure 2011 for capital equipment has come into effect from January 2011
and incorporates further refinements in the procurement process aimed at expediting and simplifying the purchase mechanism. The scope of the offset policy guidelines has
been expanded to include civil aerospace, internal security and training within the ambit of eligible products and services for discharging offset obligations. With 40
per cent of the allocation reserved for capital acquisition, this offers an immense growth opportunity for domestic electronics manufacturers serving defence segment.
For the first time in India, a Defence Production Policy was announced and became effective from 1" January, 2011. The objectives of the Policy are to achieve
substantive self reliance in the design, development and production of entire range of defence equipments as well as create conditions conductive for the private
industry including SMEs to play an active role in this endeavour. In this scenario, a transformed and customized value-chain is the right way to realize the strategic