Policypher

Inceptum '23

Team - Qualifier (672600-UMF609V4)


EXECUTIVE SUMMERY
01. India’s great dependency 02.
on foreigners for military
Situation equipment and
technology
The solution can be divided into two parts: diplomacy and deals with the USA and Russia, and addressing war inflation
while promoting entrepreneurship and stable employment.
• Expansion of loan support to SMEs
Solution • Greater involvement in R&D
• Expanding Manufacturing Facility
• Offset banking system
Impact in Defense:
• Increasing domestic procurement capacity
Impact by 70% by the year 2050
• Controlling critical dependencies by utilizing
a combination of hard and soft power
OVERVIE CONCLUSI
ANALYSIS SOLUTION
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Measures related to the monetary
and fiscal policy must India take
03. Prudent policy actions India
should take to foster sustained
entrepreneurial evelopment
to alleviate the inflationary
pressures faced by the economy and sustain a stable level of
during the war period unemployment
• GTM/Explansion strategies of Indian startups.
• Analysing other countries war inflation folicies.
Impact in Inflation: Impact on Employment:
• Formulated policies to stop check the • Provides for a systematic approach
inflationary pressures matrix via which Indian startups to
compete with China
• Checked in overreaching fiscal deficits
by a combination of quantitative • Expanding our manufacturing base
instruments by providing “Plug & Play” services
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
PROBLEM ANALYSIS
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Uneployment Rate %
Defense 12
• Lack of Defence Manufacturing base in India
• Primarily driven by Government ordnance factories 10

and poor private participation 8

• High costs involved and lack of assured market
• Poor technological transfer by foreign companies 6

• Bureaucratic delay and licensing issues 4

Inflation 2

• High Fiscal Deficit owing to increased military 0

spending during the war 31st Dec 31st Dec 31st Dec 03rd Oct 31st Dec 31st Dec 31st Dec 31st Dec 20th Jan
2033 2034 2035 2036 2036 2037 2038 2039 2040

• Inflationary pressures exacerbated by the ongoing Fleet Strength of Navy Fighter Aircraft
conflict with Pakistan
Russian
20%
Competition Indian
30% Russian
• Trade restrictions provided Indian companies 35% Indian
40%
advantage over Chinese ones, removal of such will
lead to increased competitiveness
• Increasing competitiveness to lead to the closure of Other Countries
10%
American
30%

firms thus creating unemployment German Other Countries

25% 10%
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
DEFENSE POLICY ACTIONS
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In Rs.Cr
Defense Exports
Expansion of loan support to Startups & SMEs: US-India 18000

Strategic R 15920
CAG
16000

Alliance 14000 23% 12814

12000
Leveraging the strategic alliance between
10000 9115
India and US to deepen relationships in the 8320 8434
Defense Industry 4th Industrial Mentor-Mentee fields of economy, technological 8000
Preservation Loan Revolution Program development and defense. 6000 4682
Project
4000
Allowing the US to establish a strategic 1522
2000
head in the Indo-Pacific to counter the rise
Greater involvement in R&D: of China. 0
2016-17 2017-18 2018-19 2019-20 2020-21 2019-22 2022-23

Under the terms of the agreement, the
MoD/DRDO will provide the necessary
information to SMEs about the defense
technologies and components that Indian
Armed Forces seek to indigenise.
25% of Defense R&D should be earmarked
for Industry (academia, private sector &
startups)
India to gain from US technological
transfers in the fields of defense, AI etc.
India-Russia
IGA
Leveraging IGA to source spare-parts for
Russian based weapon systems.

Providing Russia a preferential treatment

Deduction of 150% of scientific research
expenditure incurred by a company on in-
house R&D facility for specified activities,
including manufacture/production of
aircraft, helicopters, electronic equipment.
with respect to sourcing India’s energy &
mineral demands.
To reduce cost, lead time and increasing
indigenization of spare parts.
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
DEFENSE POLICY ACTIONS
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Weapon System : Total cost consists of four key Strategic reinvestment of saved cost to
cost buckets with different underlying drivers increase overall availability of weapons systems
Detailed cost buckets Underlying
Key Buckets (examples) cost driver
Mn/Year -6%
WEAPON SYSTEM NO.OF EQUIPMENTS
100
INVESTMENT
SITE COSTS FLEET

50
OPERATING CREW NO. OF EQUIPMENTS

LINE MAINTENANCE
NO. OF EQUIPMENT
CREW
OPERATING
Total Annual Cost Reduced annual cost divesting
Total cost

TRAINER FLEET weapon system units

FUEL/ELECTRICITY OPERATING HRS Available weapon system

100 33%
DPOT MAINTENANCE
NO. OF EQUIPMENTS
CREW

CONTRACTED MAINTEN.
MAINTENANCE NO. OF EQUIPMENT
DRIVEN BY NO. OF EQP. 50
ADD. SPARE PARTS
OPERATING HRS.
DRIVEN BY OPT. HRS.

OVERHEAD DEFENSE
DEFENSE OVERHEAD
COSTS
FIX OVERHEAD Total Annual Cost Reduced annual cost divesting
weapon system units
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
INFLATION ANALYSIS
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Hungary
Israel-
Fiscal Policy - Loose fiscal
policy gradually tightened
Fiscal Policy- Tightening of
after 1995
Fiscal policy to combat the
large government deficits.
Monetary Policy - Initially
loose, then supportive of right
Monetary Policy- Using
fiscal stance
quantitative inflation
instruments to target the
Incomes Policy -Restriction of
450% inflation.
wages in states enterprices in
1995 and flexible labour
Income policy- Introduce flat
markets
increment in wages and
inculcating price control.

Chile
Fiscal Policy - Central
government fiscalsurplus since
late1980s and 1997
Monetary Policy - Targets real
interest rate to control
domestic expenditures. Policy
generally directed toward
reducing inflation
Incomes Policy - Not a factor
Argentina
Fiscal Policy - Deficit reduced prior to stabilization program; tight
position there after, but stabilizers allowed to operate. Fiscal
impulse 1992-94; thereafter fiscal structural
weakness addressed but nit eliminated
Monetary Policy - Supporting role; remonetization and fall in
interest rates as inflation delcined. Tightened with outflows due
to the currency board regime
Incomes Policy - Freeze on public sector wages, pensions and
prices for nine months
Brazil-
Fiscal Policy -Small operational surplus at outset of
stablization; inadequate fiscal structrual reforms;
fiscal stance subsequently weakened
Monetary Policy - Loosening in fiscal stance placed
increasing burden on monetary
Incomes Policy - Following introduction of new
currnecy, wages to remain fixed during contract
period. Public prices fixed
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
INFLATION CONTROLS
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Fiscal Policy: Israel’s Inflation Graphs

The high fiscal deficit–is to be substantially reduce through:

• A cut in subsidies for transport, and export credits

• Reduction in defense spending

• The imposition of new taxes including a temporary surcharge on self-employed

income.

Monetary Policy:

• RBI to restrict growth of credit by raising reserve requirement and the real
discount rate on deregulated lending

• A minimum term for dollar-indexed (PATAM) deposits was raised to one year

• To increase the tradability of government securities and bonds

Income Policy:

• Backward-looking wage indexation to be temporarily suspended and to be

replaced with a flat increase in nominal wages

• The price of necessities goods and services are to be frozen for three months
after an initial increase in prices (due to larger macroeconomic trends).
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
Competing with China: Post-Trade Restriction Strategies
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R&D SOURCING MANUFACTURING SALES FEEDBACK Lithium

- ion
HIGH battery

Readiness to close gaps Majorly

• R&D capabilities Organic, using Focused
existing platform Not commonly seen Sector
• Production setup and organization Sector
AI/
• Go-to-market model Textile Fintech

• Sales and trade

incentives
Employment Generation & Expanding Manufacturing Bases:
• Organization Hybrid approach
capabilities and mindset (insource/outsource Inorganic approach • Defense+Critical Technology corridors by providing plug and play support
specific capabilities)
• Other internal • Water and uninterrupted electricity supply (132 KVA)
considerations such as • Single Window approvals and clearances to Defence and Aerospace
legal or IP trends LOW (D&A)
LOW HIGH
• Lithium-ion batteries

Gap between premium and good-enough market requirments • Labour permits for Defence and Aerospace (D&A) and electronics
• Sales, distribution and service industry
• Product performance
and quality requirements
• Rationalized regulatory regime with easy reimbursement of incentives
• Speed and flexibility required and subsidies.
• Cost structure
 OVERVIE CONCLUSI
ANALYSIS SOLUTION
CONCLUSION
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Unemployment Rate (%)

12 GDP Contribution
10 30%

8
26%
6 25% 24%
4
22%

2 20%
20%
0 18%
31st Dec 31st Dec 31st Dec 03rd Oct 31st Dec 31st Dec 31st Dec 31st Dec 20th Jan 31st Dec 31st Dec 31st Dec
2033 2034 2035 2036 2036 2037 2038 2039 2040 2040 2041 2042
15.00%
15%
Following the implementation of the aforementioned policies, it is anticipated that the average 13.50%
rate of reduction in unemployment will decrease from 0.97 to 0.85 12.00%

10.00%
Defense Exports 10%
8.50% 8.50%
38,008,540 8.00%
40,000,000 7.50%
7.00%
GR
51% CA
35,000,000 6.50%
30,000,000
25,171,218 5% 5%
25,000,000 4%
4%
20,000,000 3% 3%
16,669,681
15,000,000 11,039,524
0.40% 0.50% 0.60% 0.70% 0.80%
10,000,000 7,310,943
5,000,000 616,754 3,206,413 4,841,684 0%
931,298 1,406,260 2,123,453 2040 2045 2050 2055 2060
0
40 41 42 43 44 45 46 47 48 49 50
Defense R&D Spending (as % of GDP)
Subsequent to the implementation of the support plan, it is projected that the compound annual Diplomatic Mission Spending (as % of GDP)
growth rate (CAGR) of defense will experience a 30% increase Government Spending (as % of GDP)
Infrastructure and Job Creation Spending (as % of GDP)
Projected GDP Growth Rate
THANK YOU

Team - QUALIFIRES

SASHANKA SHANEHIL