Dec 3, 2010 -
Javo SS have been carrying out study of a very unique phenomenon regarding the Indian Defense Market and have finally completed the study.The topic " Factor resulting in a Scarcity of Defense Organization in the 10th largest Defense Market in the World." India has the 10th largest defense budget in the world.In the year of 2009-10 it posted an increase of 34% in its defense budget with a staggering Rs 54,824 crores ($12 billion) spent as capital expenditure (growth of 14.2%from the previous year).In the year 2010-10 the capital expenditure declared was about Rs 60,000 crores ($ 13.1 billion) which is still a growth of 9.4% from the previously great year of 2009-10.According to the Thirteen finance commission (TFC) of India, the country is going to see a sustained and gradual increase in its capital expenditure which is estimated to reach $ 19.3 billion by the year 2014-15. Estimations and records like such should have made India one of the prime markets that should be targeted by defense organizations and suppliers from all over the world but this has not happened.There are still a comparatively smaller number organizations that comprise the suppliers list which are actually present in the region. Why has this happened was the essential thing to worry about cause the markets needs larger supplier base for its future plans.
Team at JavoSS have been analyzing the prime reasons as to why there have been such a scarcity of defense companies who have ventured into the Indian and while a small group of companies profited from their business in the region; others have stayed out of it even when the opportunity clearly exists.After a complete analysis on this topic we have circled out the prime reasons which have led to the occurrence of this phenomenon.
Reasons for scarcity
Lack of Information: Although there have been many opportunities in the market the information linked to opportunities can be difficult to gather for companies who are not present in the region already. Even if some information like the technical specification etc can be located easily enough but other crucial information regarding the requirements, people who you are dealing with and practices of business cannot be clearly understood until and unless you are already present in the region and dealing with the people associated on a day to day basis.
Suitable Investments of time and capital are unknown: For understanding the profitability of any operation the amount to be invested i.e capital and the times in which the returns can be generated have to be clearly known.Unfortunately the time taken for creating a successful business network which results in creating profits varies vastly from company to company and while it can be easy to assumed it can never be an assured factor. Also the capital invest for any kind of infrastructure to be established by an organization in India can vary greatly depending on different factors such as location and varying prices of commodities and services from region to region with in India.
Lack of a functioning sales network: While having the right commodity as per the requirements is the prime factor while considering suppliers for a certain requirement, trust also plays a very important role in actually completing a successful sales procedure.This can be achieved by creating a dedicated sales network and by meeting the right people and creating a trust and reputation for your organization through this network.This can be a very time consuming activity while considering that the other part of the network is an organization part of the public sector of India where even finding the right people can be a challenge.
Lack of capable local support in the region : The local support from the private sector of India is almost negligible while considering the defense sector and this has led to either incomparable partnerships between organizations which generally end up bad for the business in the longer run. Also this lack of support forces willing organizations to make larger initial investments and setup their own support centers for the region which is a considerable undertaking and quite a risk without having a sustainable profit from the region.
While new organizations have to tackle these issues there exists a small group of companies that had previously invested in the region and have tackled such issues for a long time now and are today being rewarded with defense contracts and huge profits. This makes India a pseudo close market with these companies already in the inside while the other struggle to find a footing for them selves.We believe that this has to change to make it a more fair market for all willing organization who want to invest in the region and present their product to the country when they are most eagerly being sought.
Luckily for those organizations which are willing to make a market in India this phenomenon has provided them a window of opportunity which would only be available to companies who thread their path on good business decisions and are willing to put that little extra effort specially for the region and have the right support and understanding to solve such problems.Fortunately for them JavoSS had been working also to design solutions to these issue which can take care of all the possible problems related to business in India.Visit www.javoss.net for more detailed information.
Company Center: JavoSS India