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Indian A&D Sector – The New Battlefield

There are more than three million parts in a plane that requires hundreds of vendors to complete. While competition may be perceived as negative in most sectors, it is positive sign for the Indian Aerospace & Defence (A&D) industry. Global aerospace manufacturing industry is reckon to worth more than $2o billion(Bn) by 2022. Aerospace manufacturing comprises the production of general aircraft which is mostly for business use and space vehicles, usually satellites, for both military and commercial use.

Simultaneously, the defense industry to be more prodigious which is expected to be worth more than $700Bn by the year 2026.

Defense manufacturing depends on the nation’s need for military weapons and systems designed to operate on land, sea, and in the air in order to defend themselves.

Commercial Aerospace

India & China Feeding Commercial Aerospace Demand

The commercial aerospace market is expected to continue its decade-long trend of above-average growth rates. This is driven by growth in passenger travel demand and accelerated equipment replacement cycle. Factors such as improving global economies, the emergence of low-cost carriers, and increasing demand for aircraft from the developing economies of China and India are further contributing to the aerospace industry’s growth.

Governments of China and India have framed various FDI policies for promoting domestic aerospace industry and are expected to increase commercial and defence aircraft manufacturing thus, fuelling aerospace coatings demand.

Indian A&D Worth

India’s Aerospace manufacturing stands at $250 million, compared to the $100 billion global market. However, the outlook for the Aerospace and Defence Industry(A&D) in India is positive and expected to reach $70 billion by 2029, according to a joint report by IESA, Nasscom and Roland Berger. The government-backed expansion of domestic industries, particularly in Defence and Aerospace in order to increase self-reliance, support the steady growth and will attract more FDI. Several foreign companies have already entered strategic partnerships with India companies and many others and eyeing the billion-dollar opportunities in the Indian Aerospace & Defence Industry.

Indian A&D Sector Respires New Laws and Strategic Partnerships

In an attempt to improve the quality of weapons and to promote domestic production, India is changing its laws to open Defence equipment manufacturing to the private sector. For the past 70 years, the country had only allowed government-owned enterprises to make weapons. This marks a milestone for Aerospace and Defence(A&D) manufacturers and will attract plenty of foreign investment. The Indian Defence ministry released a strategic partnership policy to promote partnerships between Indian Private Sector companies and foreign companies, wherein the foreign partners would bring in advanced technology and manufacture in India. Currently, India buys almost 70% of its weapons from overseas, which leaves plenty of room for growth for the domestic production. The policy is aimed to minimize dependence on imports and infuse self-sufficiency in Defence manufacturing. Single-engine fighter aircraft, light armored helicopters, submarines, main battle tanks and armored fighting vehicles are the categories initially opened for bidding by such strategic partnerships.

Defense Electronics Market

Defense Electronics Market – The New Lingo

Within the defense sector, Defence electronics have emerged as a key market. As per estimates from India Electronics and Semiconductor Association (IESA) president M. N. Vidyashanka, of the $42.2 billion Defence budget, Defence electronics was allocated about $6.25 billion. The Aerospace and Defence(A&D) electronics market in India is projected to be around $72 billion by the next decade. IESA, along with the National Association of Software and Services Companies (Nasscom) have put together draft recommendations on a “Defence Electronics Policy” they hope the government will implement in a timely manner in order to enhance the development of the sector. The release of the Defence Procurement Procedure (DPP) in 2016 has already bought major shift that has impacted the overall supply chain dynamics. Many private sector companies have since ventured into the Defence sector and actively seeking foreign partnerships.

Some Recent Strategic Partnerships Include:

  • Reliance Defence entered into a JV agreement with the France based Daher Aerospace for Aerospace equipment manufacturing in India. The facility will be the first ‘Make in India’ Defence project set at the Dhirubhai Ambani Aerospace Park in Nagpur.
  • Tata Group signed an agreement with American Aerospace giant Lockheed Martin to jointly manufacture the combat-proven F-16 fighter jets in India.
  • Wipro Infrastructure Engineering (WIN) entered an alliance with Israel’s largest Aerospace and Defence firm Israel Aerospace Industries (IAI) to manufacture composite aerostructure parts and assemblies in India.

One specific location for India’s future Defence industry is already on the rise. A very likely hub seems to be Hyderabad, capital of the state Telangana and home to India’s first private sector missile manufacturing facility. As several global giants have joined hand with Indian companies to set up manufacturing units, Industry leaders say that the city has become the centre for implementing the Make in India initiative. With the set-up of Kalyani Rafael Advanced Systems (KRAS), a joint venture between Israel’s Rafael Advanced Defense Systems Limited and Kalyani Strategic Systems, Telangana Industry Minister KT Rama Rao believes KRAS will propel the Defence electronic manufacturing eco system in Hyderabad to the next level, noting that “Hyderabad has all the trappings to become the number one destination for Defence and Defence electronics”. Other states are also in line with states like Haryana and Tamil Nadu among others working on rolling out Aerospace and Defence policies.

Indian A&D Market

What’s Driving Indian A&D Market

  • The MTS services segment is expected to gain traction in the India aerospace & defense(A&D) market, owing to increasing need to cut the costs and outsource these services to the third-party players.
  • Land security solutions are expected to witness substantial demand in the India aerospace & defense(A&D) market, owing to the increasing need from the domestic/homeland and border security.
  • Air application is expected to hold a majority share in the India aerospace & defense(A&D) market, owing to the growing demand for efficient and environmentally friendly aircraft.
  • Initiatives undertaken by the government to make India self-reliant in terms of defense requirements is expected to drive the India aerospace & defense(A&D) market over the forecast timeline.
  • Introduction of offset policy enabled the component manufacturers to enter the India aerospace & defense (A&D) market.
  • Initiatives undertaken by the government to make India self-reliant in terms of defense requirements is expected to drive the India aerospace & defense(A&D) market over the forecast timeline.
  • Introduction of offset policy enabled the component manufacturers to enter the India aerospace & defense (A&D) market.
  • Factors such as hostile neighborhood and unrest in North-East India & Kashmir are driving the modernization agenda, thus propelling the India aerospace & defense (A&D) market growth.

Potential & Scopes For Indian A&D

  • There are enormous potential and huge opportunities for collaboration and creation of joint ventures in the aerospace sector in India for establishing Maintenance Repair Overhaul (MRO) facilities for civil and military aircraft, overhaul and maintenance of aero engines and production of avionics, components and accessories both in the civil and military aviation sectors.
  • The joint venture made the Rolls Royce one of the top aerospace companies in India which manufacture components like compressor shrouds and cones for our gas turbines.
  • The aerospace sector is heavily dependent on the supply chain and with increased players, more components can be manufactured within India.
  • Aequs Aerospace had launched the Aerospace Knowledge Center (AKC), with a vision to educate freshers and employees in the skills that precision aerospace manufacturing needs. It is a niche skill that holds high value and is not traditionally available in India.
  • And, India has plans to augment the capacity with the launching of INSAT satellites and increase it to about 500 in 4-5 years to meet its growing needs. India also has the largest constellation of earth observation satellites called Indian Remote Sensing (IRS) satellites with better than one meter resolution.
  • The Indian Defence ministry released a strategic partnership policy to promote partnerships between Indian Private Sector companies and foreign companies, wherein the foreign partners would bring in advanced technology and manufacture in India.
  • The Defense Procurement Policy (DPP-2005) gave great benefits to Indian Defense industry.

Mapping Talent Pool

Mapping Talent Pool

While there is a dearth of skilled labour in the aerospace sector, those who have been trained on machinery in the automobile industry can be re-skilled to fit the aerospace sector.

Companies have taken the initiative to train professionals in this respect.  Aequs Aerospace had launched the Aerospace Knowledge Center (AKC), with a vision to educate freshers and employees in the skills that precision aerospace manufacturing needs. It is a niche skill that holds high value and is not traditionally available in India. Since the company has presence in France and US, they were able to bring highly-experienced instructors to teach about every aspect of aerospace manufacturing. They also provide counselling to students in colleges in Belagavi as it is among the most preferred fields in engineering.

The manufacturing sector especially is experiencing a revolution with profits soaring and several firms being represented globally. Strong Public-Private consolidation, admirable policies and right technologies are going hand-to-hand. This is the right time where one looking for India as the next country propelling A&D shall put in their footprints to the morale notching into a billion dollar opportunity.

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Niloy Banerjee

A generic movie-buff, passionate and professional with print journalism, serving editorial verticals on Technical and B2B segments, crude rover and writer on business happenings, spare time playing physical and digital forms of games; a love with philosophy is perennial as trying to archive pebbles from the ocean of literature. Lastly, a connoisseur in making and eating palatable cuisines.

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