INDIAN AEROSPACE INDUSTRY: CHALLENGES AND OPPORTUNITIES

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1 RAPPORTEUR`S REPORT Brochure Release for the 8th International Conference for ENERGIZING INDIAN AEROSPACE INDUSTRY: CHALLENGES AND OPPORTUNITIES Thursday, October 17, 2013 at Silver Oaks I, India Habitat Centre, New Delhi.

2 Rapporteur`s Report BROCHURE RELEASE FOR THE 8 TH INTERNATIONAL CONFERENCE FOR ENERGIZING INDIAN AEROSPACE INDUSTRY: CHALLENGES AND OPPORTUNITIES Thursday, October 17, 2013 at Silver Oaks I, India Habitat Centre, New Delhi. Welcome remarks by Air Marshal Vinod Patney SYSM PVSM AVSM VrC (retd) Director, CAPS In his opening address Air Marshal Vinod Patney Director, CAPS welcomed all participants to the launch of the brochure for the upcoming 8 th International conference on energising Indian Aerospace Industry: Challenges and Opportunities to be held on Wednesday-Thursday, November 6-7, He said that this brochure launch function is a curtain raiser to the main Conference and will increase the interaction between users and defence suppliers. During his talk he raised questions like- Will the government relaxes its hold on the Indian Aerospace Industry and give the MSME s the desired boost? To what extent the foreign aerospace industries can support Indian aerospace industries? Is offsets the only way forward? Can we seek long term commitments? Are they desirable? He also mentioned that, for some years to come, we will have to continue to import equipment and weapon system from abroad. He emphasised the importance of effectiveness, timeliness, efficiency and commitment to the growth of Indian Aerospace industries. He further opined that, the LCA project does not measure up to this requirement and nor does the finalisation of the MMRCA

3 contract. He said there is no excuse for the delay in the MMRCA contract finalisation and the accepted needs of the IAF and the other users of the IAF must be taken seriously because they do affect national security. He again emphasised the importance of R&D in defence and technology which will be a major determinant of power. Special Address by Mr.H.J Kamath, Vice President, Mahindra Defence Systems He said that aerospace space has emerged as one of the most rapidly growing sector both commercially as well as in defence. He stated that the civil aviation sector has made a major contribution for the growth of Indian Aerospace industry in the past two years. He further said that, defence offset policy has provided immense opportunities for private companies entering this sector. He opined that, in future Private industries have to play a major role in areas like avionics, MRO and manufacturing and also pointed out that the private industries requires significant investment in terms of infrastructure, technology and R&D and the necessity to combine the strengths of the private and the public sector to take advantage of the surging domestic demand and become self reliant in the defence sector. He emphasised the role of political stability and other socio economic factors in attracting investment in this field. He said that the govt of India, in consultation with industry organisation like CII has taken some initiatives to promote participation of domestic private sector through ensuring offsets as given in the DPP. But he criticised that the implementation of offset guidelines has been very slow. He also stated that the percentage of India s share in the aerospace offshore engineering should be increased.

4 This was followed by the Brochure release by Air Marshal S. Sukumar AVSM VM, Deputy Chief of Air Staff. Keynote Address by Air Marshal S. Sukumar AVSM VM, Deputy Chief of Air Staff He said that, as we enlarge our zone of influence and seek a greater role in international affairs, the need to commensurately have a strong and credible military power is only increasing. He also emphasised the importance of aerospace power for its unique attributes of reach, speed, precision and quick response and stated that it is also the most effective instrument for deterrence. He said that the govt strongly supports IAF s modernisation drive and that the majority of the IAF s acquisition plans will fructify in the 12 th, 13 th and 14 th five year plans. The anticipated value of orders in the next decade or so is likely to be of the order of 2 lakh crores and the new orders will induce new technology into the Indian aerospace sector.

5 He stated that the involvement of the private sector has not been very encouraging and pointed out that the main problems are lack of tier I, tier II and tier III industries to back up the big players and the resistance by DPSU s for outsourcing. He further stated that offsets have facilitated the bringing in of advanced technologies, modern manufacturing infrastructures and industry practices. He also opined that the private industries also should be ready to invest their own resources, but their problem is the current tax regime which they consider as the major impediment as well as the stringent FDI limits. The challenge here for the industries is to find ways to interact and utilise the extensive infrastructure set up by DRDO and DPSU s. He pointed out that the Indian aerospace sector has a huge market in the MRO and the follow on engineering support as a lot of other countries also operate the same platforms being operated by the IAF. Q&A Session After the Deputy Chief s address, the floor was opened for questions. These were salient points that came out from this session: On the question of self reliance the Deputy Chief said that India is moving towards selfreliance in the aerospace sector. He expressed concern on the lesser role played by Indian industries in the joint development of FGFA and MTA and stated that IAF has flagged this concern with the government. On the AVRO RFI, he said that the industry had asked for time extension which was granted by IAF (two months) which is permitted under DPP. Regarding the involvement of service officers with the industry and with the DRDO, the Deputy Chief said that in the last few years there are many projects in DRDO where IAF officers are the key people involved. He gave the Astra programme and computerised pilot selection system as examples. He further mentioned that a proposal is under discussion with MoD to depute serving officers to the industries. On the question of RFI, he said that all methods of procurement are open and that IAF is particularly very serious about indigenous production. On the MMRCA deal, he said that it is expected that it will be signed within the financial year. And on the indigenous development of Jet engines, he said that there is a

6 proposal with GTRE for developing engines for IJT and smaller 25KN engines. He further said that the engine we will get for the MMRCA will kick start our capability in the engine domain, which could help improve our capability in the propulsion system. Vote of thanks by Shri. Anjan Das, Executive Director, CII The closing address and vote of thanks was given by Shri Anjan Das, Senior Director, Confederation of Indian Industry. He stated CII has seen a complete shift in the mindset of the Indian private sector in the last two decades gradually but only in the nonstrategic sectors. The growth has happened not only because of industry proactiveness, but also because of govt proactiveness. He further stated that the earlier CII s role of fighting with the government has changed now into partnership with the govt. This partnership has facilitated the growth of private industries in general. However, this growth has not been seen in the defence sector. He opined that this might be because; some partnership model is missing in the defence sector. (The report was prepared by Arjun Subramanian P, Associate Fellow, CAPS and Prerna Gandhi, Research Associate, CAPS) XXXX Designed By: Kriti Singh, AF, CAPS.Photo Courtsey: CII