Page 79 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

Over the last few years, apart from government incentives, the Indian specialty chemicals industry is
driving its capabilities by focusing on 2–3 niche molecules and their derivatives; putting in continued
efforts to distinguish itself via expertise in process chemistry; and investing in complementary legs of
the value chain to establish a fully integrated business model.

Defence security: A necessity in 2020s

Ever since the fall of Communism, the world has been unipolar, centred on the US. The US was
instrumental in brining about global trade arrangements, financial regulations, monetary system and Nations will
security arrangements. This may be changing though as the world is increasingly turning multipolar with have to rethink
Russia and China emerging as revisionist superpowers. Specifically with regards to defence security, their existing security
arrangements,
nations will have to rethink their existing arrangements. This will entail boosting domestic defence i.e. to boost
manufacturing capabilities and diversifying the sources of procurement of defence equipment. domestic defence
Defence spending is set to jump, if not explode. manufacturing
For countries such as India, there is a clear need to be self-reliant in defence manufacturing capabilities capabilities and
considering the country shares borders with several countries and has a history of wars with China diversify sources of
and Pakistan. Reliability of the US in terms of ensuring peace and security in the region is now not as procurement of
high as it used to be, since the US seems to be stretched and exhausted in its role as the custodian of defence equipment
global peace. At the same time, Pakistan is increasingly looking like a failed state while China is showing
resolve to establish itself as a regional hegemon. For India, all these necessitate a step-up in defence
spending as well as domestic defence manufacturing capabilities.
According to the Stockholm International Peace Research Institute, India is among the top five nations
in the world by spend on defence. But India lags the top two – US and China – by a wide margin. Even
otherwise, India’s defence spending in terms of capex has grown slower than its nominal GDP. Given
current geopolitics, it is only natural that this segment gets its due.

1500 Exhibit 15:
Defence spending
across countries
(USD billion)
1200 77
(USD, bn) 900 47 65 66 71 73 293

145 47 51 51 57 233 240 258
164 182 197 199 210
600

300 725 679 648 634 640 647 682 734 778 801

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
US China India UK Russia
Source: SIPRI, Nuvama Research

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