ACMA’s
first Aerospace & Defence Summit stresses the need to review
policy, develop
infrastructure and promote collaboration
With an objective to
build local manufacturing capabilities and develop the Aerospace & Defence
supply ecosystem in the country, the Automotive Component Manufacturers Association
of India (ACMA) organised the first Aerospace and Defence Summit to understand
and address the Opportunities & Challenges in the sectors.
India is expected to
emerge as the world’s third largest aviation market by 2020 and perhaps the
largest by 2030. There is also a significant push from the
Government of India on the Aerospace majors to establish their R&D,
manufacturing, maintenance, warehousing and training facilities in India. Due
to multiple economic and geopolitical reasons the Global Aerospace and Defence
industry is witnessing a gradual shift to Asian economies. Additionally, with
the recent announcement of the Union Budget, the Government of India has taken
a pragmatic approach by allowing 49% FDI in Defence sector. This would present immense
opportunities for the components industry to contribute towards a nascent yet
promising sector through local manufacturing.
The Guest of Honour, Mr.
C K Vishwakarma, Executive Director, Hindustan Aeronautics Ltd. (HAL) commented, “the
Indian auto component industry is now keen to diversify into Aerospace, Defence
and railways”, He stressed on the challenges with respect to the Aerospace
component manufacturing which needs to be addressed such as setting up a strict
quality control system, machining of aluminium alloy, high strength steel,
super alloy etc. “Since the time of its inception the component industry has
matured manifolds in terms of technology, skill building and capability and
hence they should directly approach the Indian Defence Industry for business”,
he further added.
Mr. Ajay Shankar, Member
Secretary, National Manufacturing Competitiveness
Council (NMCC) and the Chief Guest for the
occasion, said that “today we have a window of opportunity for the automotive component
manufacturers who are looking to get into the Aerospace and Defence.
Understanding the capabilities of the automotive component manufacturers it
would be just a transitional shift for them who are equipped to undertake the
Aerospace and Defence sector’s requirements”.
President ACMA, Harish
Lakshman, while
addressing said “This is for the first time ACMA has organised a summit
focusing on the Aerospace and Defence sector. We are happy at the overwhelming
response that we have received towards this initiative. With more than 100
participants and the number of speakers representing the OEMs, it is indicative
of the fact that there exists a significant opportunity for the component
manufacturers to diversify and cater to the requirements of the Defence and
Aerospace industry.”
“We as an industry are
keenly following the developments of this sector and see potential
opportunities for partnering. With the latest provisions such as raising the
cap on FDI in Defence, we feel that the stage to harness opportunities in the
Aerospace and Defence space is being set. ACMA believes that in the next 10
years the country is going to see an explosive growth in this sector and
clearly indigenous manufacturing is going to benefit from it” Mr.
Lakshman added.
Dr. Vivek Lall,
President-Chairman’s office, Reliance Industries Ltd. spoke
about 6 areas which are important for the automotive component
manufacturers such as quality assurance, cross learning from Aerospace and
vice-versa, adjustments to low volumes, skill base required in Aerospace,
introspection of raw material supply in India and investment and incubation
timelines, especially since Aerospace is a high investment sector. With respect
to India he mentioned three key areas which can be worked upon to push
automotive to Aerospace. First there is Additive Manufacturing (AM) which will
be the future in next 10 years, second is the composites or structural fibres,
these being the sunrise sectors which India can work upon; and the last being
plastic electronics i.e flexible, bendable and stretchable electronics.
The automotive sector
has emerged as a torch bearer for showcasing India’s strength in the
manufacturing and engineering domain globally. The country has gradually been
able to successfully build a thriving ecosystem of automotive OEMs and
component suppliers who are recognized worldwide for their quality and cost
effective product offerings. These factors have enhanced the importance of
India in the eyes of global Aerospace and Defence manufacturing
companies. The global primes are looking towards increasing their
manufacturing and sourcing base from this region as a part of their realigned
global strategy.
Highlighting
the future in the Indian Aerospace sector, Mr. Pranav Kapuria,
Chairman, Aerospace Defence and Railways (ADR) Committee ACMA said, “As
per market estimates, between 2012 – 2032 more than 30% of the global
commercial aircraft orders will be by airline operators from Asia Pacific
countries. India is expected to emerge as the world’s third largest aviation
market by 2020 and perhaps the largest by 2030. There is a
significant push from the Government of India on the Aerospace majors to
establish their R&D, manufacturing, maintenance, warehousing and training
facilities in India”.
Moreover, “while on one hand western economies
are witnessing a gradual decrease in military spending, on the other emerging
economies such as China, India, Brazil and Middle East regions are witnessing
an increase in their Defence spending due to volatile security environment”
added Mr Kapuria.
The deliberations at the
conference led to the following recommendations to arrive at a global
competitive position and to harness local manufacturing for Aerospace and
Defence:
Action required:
a) Policy:
i) The
government should define a comprehensive road map for the Aerospace and Defence
sector, in absence of which the Indian Defence manufacturing sector is not able
to cater to India’s current requirements and is thus forced to look outside to
meet the requirements
ii) Immediate
steps need to be taken to create a focused action plan for upgrading the
skillsets in the MSMEs
iii) The
existing version of Defence production policy is very generic and does not lay
down a clear roadmap on how private sector participation will be harnessed to
build India’s indigenous capability. The policy document needs to be revised
with more specific action points such as the Technology Perspective &
Capability Roadmap (TPCR) document which could be made more specific to help
the industry plan their long term investments in the sector effectively. This
would also help in aligning the R&D initiatives of the OEMs towards the
actual need of the Defence forces and will provide clarity to the component
manufacturers in planning their capacity and capability
iv) Domestic
production of Aerospace and Defence equipment should be accorded the status of
‘Deemed exports’. All applicable taxes (Customs, Excise, VAT,
Service Tax, R&D Cess, Octroi etc.) and Corporate Tax on production of
Defence products should be zero-rated for a period of ten years. Exports
should be facilitated with monetary incentives and faster clearances. This
should not be misinterpreted as a ‘tax loss’ since there’s hardly any major
Aerospace manufacturing or MRO activity in India. The creation of
jobs, saving of foreign exchange and the tax on consumption expenditure by
employees would be several multiples of the notional ‘tax loss’
v) Although
the policy allows export of Defence equipment after approvals and scrutiny, red-tape,
lack of defined processes, delays, uncertainties and practical hurdles
prevents India to be considered as preferred export hub by global players.
Hence, the current processes need to be reviewed
b) Infrastructure
i) There
is a need for the Government work with the Aerospace OEMs and Tier 1s to set up
vocational training centres and Aerospace manufacturing Centres of Excellence
(CoEs) across key locations to impart the niche technical skills required for
Aerospace manufacturing
ii) Unlike
China or South Korea, Indian companies are not able to leverage their
international acquisitions to develop an indigenous Defence industry. The role
of Defence offsets as a means of developing a Defence industrial base (DIB) in
India has failed. This is because the offsets are limited to providing
components that the Indian partner is anyways good at. The offset order
quantity is limited to the orders placed on the global prime by the MoD. Unless
the government facilitates entry of Indian players in the global supply chain
of the global primes, expanding the DIB will remain a pipedream. The Government
should therefore work with the industry to identify key technologies for which
India can become a global production hub and then tailor policies and
procedures to support that
iii) While
India cannot become a world leader in every part of the Aerospace and Defence
industry, over the next 10-15 years it can however become one of the top
players if it focuses on the nuclear and space research program
iv) Lastly,
India should adopt a cluster-based approach, with each Aerospace cluster
focusing on particular sub system or technology area. This will help in
creating a focused ecosystem and capability building across 3-4 regions spread around
the country
c) Global
collaboration
i) The
DRDO could explore technical collaboration with private industries,
universities, government laboratories and talented individuals to help churn
out cutting edge technologies
ii) Strategic
technical collaborations/JVs should be encouraged between DPSUs and the Indian
private sector to promote indigenous manufacturing. E.g. Samtel’s
joint venture with HAL is a prime example of how DPSUs can successfully partner
with private sector to leverage on the strengths of both the companies to
support indigenous production.
iii) By
facilitating FDI, partnerships or technical JVs with global OEMs and Tier 1
suppliers that are looking towards increasing their sourcing from India, Indian
companies can increase capability, financial muscle and the know-how to
position themselves as global Aerospace players
About ACMA:
The Automotive Component Manufacturers
Association of India (ACMA) is the apex body representing the interest of
the Indian Auto Component Industry. Its active involvement in trade promotion,
technology up-gradation, quality enhancement and collection & dissemination
of information has made it a vital catalyst for this industry’s development.
ACMA’s charter is to develop a globally competitive Indian auto component
Industry and strengthen its role in national economic development as also
promote business through international alliances. ACMA is an ISO 9001:2008
certified Association.
For further details:
|
ACMA
Harkaran Malhotra
9818388411
|
Avian Media, Chennai
Krishna Moorthy - 9442191717
|
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