Business Opportunities in India with a focus on MRO and Defence Sector

Current Profile of EquipmentState of the Art 15 per centMatured 35 per centObsolescent 50 per cent The maintenance, modernisation and

upgradation of this equipment are a pressing requirement

Acquisition of latest state-of- the-art equipment is necessary to enhance capability of Indian Armed Forces

Defence Budget is USD 31.9 billion placing Indian in the top ten global destination

Growth rate of increase of budget in recent years has been 13.4% CAGR

40% of the budget is on Capital Expenditure 70% purchases are based on imports Defence Public Sector units produce most of

domestic production which has a large percentage of imported sub-systems

The Government of India wants to reverse trend and would set in place measures for attracting FDI

Domestic manufacturing to be augmented with FDI and transfer of foreign technology

Increase present Sectoral FDI cap of 26 per cent and private sector participation permitted

FDI by global companies in defence sector could lead to collaboration with public sector units

Flow of FDI and new technology will strengthen the defence public sector units

Defence production critical for security needs would be in foreign ownership

The ownership of global defence production companies are in a state of constant flux

A viable domestic defence production is required to meet urgent requirements in time of war

Critical information and technology can be regulated by verification and clearance procedure and export control as in the case of USA

Strong surveillance system can take care of other security concerns as illegal sales etc

OEM’s are reluctant to licence proprietary technology because of cap leading to minority status

Increase in cap will lead to technology transfer with spin offs in civilian areas

Capital Intensive Defence industry requires strong FDI flows

Production of defence equipment will strengthen manufacturing base

FDI cap can be extended to 74 per cent as in case of telcom

Indian Chambers of Commerce have put in objections but Companies like BAE have stated their requirements to Government of India

Defence Procurement Procedure was formulated in 2002

Objective: To ensure efficiency and transparency in Defence acquisitions

Roadmap for future- coordinate offsets, transfer of technology and stimulate Foreign Direct Investment

FDI cap is bound to increase The public sector monopoly will be diluted

in the coming years

Requirement of Aerospace sector for high-end technologies

Significant comments of Air Chief Marshall, PV Naik, Chief of Air Staff

A Defence Production Policy for a level playing field for the private industry

Indian private industry should move from fringes to mainstream

Private sector’s participation in defence industrial base required

There are divergent views on the FDI limit in the country

A case-to-case basis on FDI limit may be considered

Air Chief Marshal remarks are significant about the current state of Indian Air Force( IAF)

Air Defence is most critical area of concern, obsolence has to come down

Modernisation of IAF includes induction of new fighter aircrafts, helicopters and transport aircraft

By 2022 IAF will have 42 squadrons MRO facilities needs are urgent and the IAF is

looking for experienced MRO companies MRO requirements will be required in large

bases and also forward areas

Three AWACS have been purchased by the Indian Air Force

Two planes have been delivered and one more will be delivered by end of year

Purchase of two more AWACS has been cleared Long term plan is to purchase a total of ten

AWACS There is a requirement by the Indian Air Force

for an MRO system Experience in appropriate technology is

required or collaboration can be done Indian partners like TATA Group or other large

Engineering companies can be sourced

The Air Headquarters in New Delhi has to be always contacted in the first instance

There is no requirement to approach the Indian Defence Ministry

The contact has to be made by the concerned company or the Trade Commission of Embassy

The company can nominate a local Indian as their representative but not on consultant status

It is a myth that power brokers are required or a system of internal contacts

The Indian Air Force has an intelligent team of officers with full integrity

The company which has the required technical and organisational background will find easy access

It is advisable to call the Air Headquarters and ask to be connected to the Directorate of Engineering

There are various departments and Directorate of Engineering D has been the dealing department

An officer of the rank of Wing Commander who is equivalent to Joint Director should be contacted

The officer will give the fax number and request for full details to be faxed

The hard copy with documents can be send by courier only stating department and with no officer name

A presentation will be invited at Air Headquarters and the officers will be headed by an Air Vice Marshal

On successful completion of this stage the company will be referred to the major repair base

This is the HQ Maintenance Command IAF and is located at Nagpur

A Group Captain will coordinate this crucial presentation The presentation will be to the officers actually involved

in MRO activities The officers will be headed by an Air Officer

Commanding-in-Chief This Command will inform Air Headquarters and

coordinate further activities Care must be taken at all times for foreign nationals to

take advance permission to enter facilities It is useful to have an Indian national to coordinate

activities

Wings Aviation MRO (Wings Aviation Private Limited (WAPL), Hyderabad, India

Air Works India Engineering Pvt. Ltd   HAMCO (Hydrabad Aircraft Maintenance Company) Hindustan Aeronautics Ltd Taneja Aerospace & Aviation Ltd (TAAL) Shaurya Aeronautics Pvt. Ltd. (SAPL) Vikram Aviation Pvt. Ltd. (VAPL) Deccan Technical Services (DTS) Cochin International Airport Ltd A.R. Aerotech Pvt Ltd  Air India MRO at Mumbai & Hyderabad

Poised to be a large commercial and defence aircraft market

Growth rate would be approximately 10%, USD 2.6 billion by 2020

MRO manpower is approximately 60 per cent cheaper as compared to existing facilities

Large pool of technical manpower Locational advantage – between Europe and

Asia Pacific

Transtec Overseas Pvt Ltd part of group (Est. 1923) ISO 9001:2000 In the field of Mechanical power transmissions, Material handling

systems, Ground Support Equipments Assembly and Manufacturing facility in Gujarat Technical Partners in England They have a complete team of specialized engineers from hydraulics,

pneumatic, electrical & electronics sector. Since India was previously an importing nation back in the early 70, they developed first Container Dollies for Air India in 1978 as started indigenous development of Ground Support Equipments

Training initiatives Cadet Pilot Training- Cabair Group www.cabair.com [Won contract to

send students from Air India to their facility in Florida] Aircraft Engineering Training- Kingston University- London [Currently in

bid to establish National Institute for Aircraft Engineering Training] > www.kingston.ac.uk/engineering

Delhi airport picture - http://www.acgil.com/airporttransfer/index.html

Mumbai airport picture - http://flashnewstoday.com/wp-content/uploads/2010/09/mumbai_airport.jpg

Discussion Paper: Ministry of Commerce and Industry:

http://dipp.nic.in/DiscussionPapers/DiscussionPapers_17May2010.pdf

MRO Perspective: http://www.thehindubusinessline.com/

2009/03/16/stories/2009031650411200.htm