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ELECTRO -OPTICS SYSTEMS MARKET OF INDIA

The 21st century is witnessing a technology driven transformation, with the nature of warfare primarily making imagery in decision-making processes paramount and thereby  triggering the use of electro-optics technologies to counter rapidly evolving security threats and fastening the decision making process. Thus, there is an urgent need by the three armed forces to continuously working on bettering its electro-optics systems and also for more focus and acceleration of capability building in the context.

Electro-optics systems also sometimes referred as optronics or opto-electronics are the electronic devices that source, detect and control light. These devices basically can detect or emit light in any part of the spectrum. The increased applications of these devices are found in a number of fields including defence and homeland security. Rather, the electro-optic systems are seen to be increasingly being used by the defence forces around the world owing to their advantage of enabling fast paced decision-making through effective situational awareness, intelligence gathering and targeting action. A typical electro-optics system can be used for target acquisition and engagement in the defence segment. There are variety of electro-optic systems or products used for a wide range of operations in defence sector which include laser range finders, night vision devices (NVDs), visible-light cameras, infrared (IR) sensors, lasers, lenses, gap measuring devices, sighting systems and integrated observation equipment and other optical technologies. The electro-optics systems can be broadly categorized into three types: Land-based Electro-Optics, Airborne based Electro-Optics And Naval-based Electro-Optics. Refer Fig.

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The importance of electro-optic technologies is seen to be taking quantum jumps and is growing by leaps and bounds in the modern day battlefield scenario. Rather, the technological advances in electro-optics has lead to more rugged, reliable, compact and competent laser devices coupled with the growing importance of imagery in decision-making processes are largely responsible for making these crucial in the modern warfare. These devices continue to improve in performance, finding increased acceptance and usage in the present day battlefield scenario. ITL, Seraphim Optronics, Carl Zeiss, Sagem, Elta, Cassidian, General Dynamics and Thales are among the major global companies offering electro-optics solutions to the armed forces world-wide.

ELECTRO-OPTICS: GLOBAL MARKET TRENDS
The market for electro-optics is primarily driven on the acquisitions of other major defence platforms mainly on the acquisitions of heavy and medium vehicles, air platforms and naval vessels and artillery. With the countries of the world seeking to procure new platforms in a bid to modernize their armed forces and upgrading the already inducted ones, there leaves no room for doubt that the global electro-optics market would be witnessing a robust increase year-on-year. The global electro-optical market is estimated to be around $12 billion for the current fiscal 2014-15 and is expected to reach over $16 billion by 2024-25 registering a CAGR of more than 3.00 per cent.

Taking into consideration the country-wise projections, then it depicts that land-based electro-optics systems are expected to account for the majority of the global electro-optics market, followed by airborne and naval systems. Over the forecast period, cumulative global expenditure on electro-optics systems is forecast to value US $153.69 billion. Country-wise, North America is expected to account for the largest share of the total defence electro-optics market followed by Asia and Europe. Amongst the Asian countries, China, Russia and India are the ones who are likely to invest more on the procurement of these systems. This will be largely driven by the efforts of countries such as India, China, UK and Russia to modernize their armed forces.

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ELECTRO-OPTICS: INDIAN MARKET OVERVIEW
The Indian electro-optics market is not only huge but also growing at a very fast pace; ironically, most of the demand is being fulfilled by imports as there are not enough public or private firms in this segment to cater to the current and augmenting demand. Moreover, coming to the indigenous industry, it is to be seen that electro-optronics market is monopolistic based with Government being the market and the market maker. It is to be noted that all platforms, whether the advanced light helicopters, infantry combat vehicles or tanks, will trigger the market of electro-optics. However, considering the various on-going and futuristic defence programmes of the three defence services, it is apprehended that the land based electro-optics systems market would be witnessing the highest spending followed by airborne and naval based electro-optics systems.

Market Structure - The Indian electro-optics market is not fragmented one as the market is captured by few established players and also the total number of players which constitute the market is from the organized sector which includes the public sector entities. Rather, till date most of the major defence programmes in this segment has been undertaken by Ordnance Factory Board's Opto Electronics Factory (OLF), DRDO and DPSU BEL and that too most of them being through transfer of technology. Unorganized sector (medium/small private manufacturers) exists but does not comprise of large number. Most of the technology acquired is from reverse engineering, while few others resort to multi sourcing for specific project/tender.

Prominent Indian Players:
The major indigenous players existing in this market are:

•    DRDO Lab Instruments Research and Development Establishment (IRDE) - IRDE responsible for optronics R&D but usually outsources for manufacturing.
•    Opto Electronics Factory (OLF) - Established in 1988, the manufacturing unit of the OFB under the Ministry of Defence, Govt. of India is engaged in a wide range of optics and opto electronics instruments and laser based sighting systems are manufactured specifically, to meet the requirements of military, para-military and security forces. The design of these systems is based on state of art technology provided by foreign collaborators as well as indigenous research. It is closely associated with IRDE.
•    Bharat Electronics Limited (BEL) - BEL has partnerships with multi-OEMs. It is the only manufacturer of detectors & II tubes in India. Also has access to Russian and Israeli technology. So far the company has supplied more than 10,000 NVDs to the Indian Army with 2nd Gen Image Intensifier Tubes and more than 20,000 units have been supplied to other customers.
•    Alpha Design Technology - Alpha Design Technologies have established assembly and testing bench through ITL Israel. They partner with other OEMs depending on the project e.g. ELOP Israel for FAC project.

Major Domestic Players are:

Company NamesCore Competencies / Major ProductsSegments Addressed
 BEL, Machlipatnam (ELOP, OIP, New Noga Light)  Laser Range Finders, Night Vision Devices, Gap Measuring Devices, Sighting Systems and Integrated Observation Equipment, HHTI   Defence & PMF
 IRDE  Optical systems such as day vision devices, low light level TV, thermal imaging (FLIR) & laser based instrumentation, Complete Fire Control Systems, Target Acquisition Systems, Thermal Imagers, Night Vision Devices (II Sight, LLTV), Laser Range Finders/Sensors, Laser Warning Systems, Fiber Optics Systems.  Defence & PMF
 OLF  Optical Devices, Night Vision Devices, Night Weapon Sight, Day Weapon Sight, Armoured Sight for Tanks, Telescopic sight, Laser range finder, red dot sight, Periscopes.  Defence, PMF & Civilian
 Alpha Design Technology(ITL)  Night Vision Devices, Night & Day Weapon Sight, HHTI, Surveillance Devices  Defence & Non Def
Tata Power SED  Electro-optical payloads, thermal imaging, night vision systems.   Defence
 Scientific Engg House  Night Vision Instruments, Theodolites. Defence
 Hyderabad Batteries Ltd (Newcon)  Night vision devices, Electronic/Uncooled TI modules  Defence & Non Def
1Trident Infosol (Cantronics, Selex, ATN)  Night Vision Devices, Night Weapon Sight, HHTI : Cooled, HHTI : Un- Cooled  Defence & Non Def
 PCI Limited, Delhi (Distr FLIR)  Project based  Defence & Non Def

Prominent Global Players are:

US/CanadaEuropeanIsraelOthers
 Northrop Grumman  Thales, France ITL  PCO(Bumar Gp), Poland
 Raytheon  Sagem, France  ELOP Rosoboron, Russia
 ATN Corporation  Finmeccanica, Italy  Controp Precision Tech Ltd.  Samsung Thales, S Korea
 General Starlight, Canada  Qioptiq, UK  Meprolight  Russia's NPO (Novosibirsk) Optics State Corporation
Newcon Optik  EADS  TAMAM ---
 FLIR  Oerlikon Contraves, Swiss  Rafael ---
--- ---  Prizmatech ---

Market Potential - The need to bolster the electro-optics of all the three services is quite large. Trends depicts that the electro-optics constitutes about 15 per cent of the total defence strategic electronics market of India. Considering this, it is anticipated that the electro-optics market in 2013-14 was about Rs 2495 crores and the country is likely to spend about Rs 2994 crores in the current fiscal. Over the forecast period from 2014-2025, the cumulative expenditure on electro-optics systems is forecast to value US $14.02 Billion (Rs 77118.94 crores).

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Projected Market Size - The three defence services have listed out their respective requirements in relation to the electro-optics that they want their forces to be equipped with and will be going for procurements in these areas. Projections depicts that during the period from 2013-2020, the three armed forces are likely to spend a whopping over Rs 24000 crores (USD $4.2 Billion) on electro-optics systems. Refer Table. As seen, out of all the electro-optics systems, it is the Night Vision segment that would be garnering the maximum share. At present, the Army alone has a shortage of at least 30,000 third-generation night vision devices. Sub-segment-wise, demand of Passive Night Vision goggles (PSVGs) is the highest in the market followed by platform optronics, hand held thermals, weapon night sights (WNS), thermal imaging weapon sights, weapon sights, integrated observation equipment and standalone infrared, seismic and acoustic sensors.

The below given table shows the estimated market value of major electro-optics in future:

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Market Opportunities - Keeping in mind the obsolete weaponries of the three defence services and their ambitious modernization/upgradation programmes being undertaken there definitely exist plethora of lucrative opportunities especially for the private sector companies to tap upon as at present a majority of the market is captured by few established players. Amongst all the defence services there is a huge requirement of electro-optics systems from Indian Army.

Ritika Behal

Ritika Behal

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