Policypher

Inceptum '23

Team - Qualifier (672600-UMF609V4)

 OVERVIEW ANALYSIS SOLUTION CONCLUSION
EXECUTIVE SUMMERY

01. India’s great dependency 02. Measures related to the monetary

and fiscal policy must India take
03. Prudent policy actions India
should take to foster sustained
on foreigners for military entrepreneurial evelopment
to alleviate the inflationary
Situation equipment and pressures faced by the economy and sustain a stable level of
technology during the war period unemployment

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.
Solution •
•
Expansion of loan support to SMEs
Greater involvement in R&D
• GTM/Explansion strategies of Indian startups.
• Analysing other countries war inflation folicies.
• Expanding Manufacturing Facility
• Offset banking system

Impact in Defense: Impact in Inflation: Impact on Employment:

• Increasing domestic procurement capacity
Impact by 70% by the year 2050
• Controlling critical dependencies by utilizing
a combination of hard and soft power
• Formulated policies to stop check the
inflationary pressures
• Checked in overreaching fiscal deficits
by a combination of quantitative
instruments
• Provides for a systematic approach
matrix via which Indian startups to
compete with China
• Expanding our manufacturing base
by providing “Plug & Play” services
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
PROBLEM ANALYSIS
Uneployment Rate %
Defense 12
• Lack of Defence Manufacturing base in India
10
• Primarily driven by Government ordnance factories
and poor private participation 8

• High costs involved and lack of assured market 6

• Poor technological transfer by foreign companies 4

• Bureaucratic delay and licensing issues
2

Inflation 0

• High Fiscal Deficit owing to increased military

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• Inflationary pressures exacerbated by the ongoing Fleet Strength of Navy Fighter Aircraft
conflict with Pakistan
Russian
Competition Indian
Russian
20%
30%
• 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

10%
25%
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
DEFENSE POLICY ACTIONS
Defense Exports
In Rs.Cr
Expansion of loan support to Startups & SMEs: US-India 18000
15,920
Strategic 16000
CAGR
Alliance 14000 23% 12,814
12000
Leveraging the strategic alliance between 9,115
10000 8320 8,434
India and US to deepen relationships in the
Defense Industry 4th Industrial Mentor-Mentee fields of economy, technological 8000
Preservation Loan Revolution Program development and defense. 6000 4682
Project 4000
1522
Allowing the US to establish a strategic 2000
head in the Indo-Pacific to counter the rise 0
Greater involvement in R&D: of China. 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.
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
DEFENSE POLICY ACTIONS
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
DRIVEN BY NO. OF EQP.
NO. OF EQUIPMENT
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
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
INFLATION ANALYSIS
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
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
INFLATION CONTROLS
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).
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
Competing with China: Post-Trade Restriction Strategies
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
• Product performance • Sales, distribution and service industry
and quality requirements
• Rationalized regulatory regime with easy reimbursement of incentives
• Cost structure • Speed and flexibility required and subsidies.
 OVERVIEW ANALYSIS SOLUTION CONCLUSION
CONCLUSION
Unemployment Rate (%)
GDP Contribution
12
30%
10

8
26%
6
25% 24%
4
22%
2

0 20%
20%
18%
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15%
15%
13.50%
Following the implementation of the aforementioned policies, it is anticipated that the average 12%
rate of reduction in unemployment will decrease from 0.97 to 0.85
10%
10%
8.50% 8.50%
Defense Exports 7.50%
8%
7%
38,008,540 6.50%
40,000,000
GR
30,000,000 51% CA 25,171,218 5%
3.50%
4%
4.50%
3% 3%
20,000,000 16,669,681
11,039,524 0.40% 0.50% 0.60% 0.70% 0.80%
7,310,943
10,000,000 4,841,684 0%
3,206,413
616,754 931,298 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)
Diplomatic Mission Spending (as % of GDP)
Subsequent to the implementation of the support plan, it is projected that the compound annual Government Spending (as % of GDP)
growth rate (CAGR) of defense will experience a 30% increase Infrastructure and Job Creation Spending (as % of GDP)
Projected GDP Growth Rate
THANK YOU

Team - QUALIFIRES

SASHANKA SHANEHIL