SOURCE: Financial Express
India’s Defence Sector has enormous potential to become one of the world’s leading defence manufacturers including in the aerospace sector. But it is still an early promise and is evolving, taking small steps towards becoming autonomous or as the GoI likes to call it, ‘Atmanirbhar’. The defence and aerospace manufacturing in India is in its nascent stage, and the export-import data and defence industry’s global statistics back this fact.
In India, we have some of the PSUs which have done good work but there is still a long, long mile to go before India realizes its dream of becoming self-reliant, self-sufficient and self-sustainable in defence and aerospace manufacturing. India recently incorporated DAP-2020 which has been hailed as a well-elaborated acquisition process and strives to make India “Atamnirbhar’ or self-reliant.
In an exclusive conversation with the Financial Express Online Par Wadhawan, Managing Director and Site Lead of Collins Aerospace, Bangalore talked about India’s aim to become aerospace manufacturing hub, government’s role, policies and more. Excerpts:
How do you see India’s capacity and potential in the global manufacturing hub?
The President of India reaffirmed India’s purpose and a clear commitment to being self-reliant in defense when he spoke at the recently concluded Aero India gathering. At the event, which had the overarching theme of Atmanirbhar Bharat, President Ram Nath Kovind emphasized India’s ability and potential to be a global manufacturing hub. He said that India is more than just a market; it is a land rich in opportunities, and that there is a significant opportunity to encourage globalization by making India a more successful player on the global stage.
During the same event, the Defense Minister emphasized how India is working to promote globalization by becoming a competitive global player and encouraging foreign companies to open offices in India. He set a goal of Rs 1.75 lakh crore in turnover and Rs 35,000 crore in aerospace and defense exports by 2024.
India most certainly has a large talent pool in engineering, production, etc. alongside the technologies to become a manufacturing powerhouse. This is made evident in the number of foreign companies that outsource their manufacturing work to India. India acknowledges that it needs managerial and technological expertise from foreign Original Equipment Manufacturers (‘OEMs’) that will be critical to the development of a defense or commercial aircraft. Consequently, certain reforms will have to be implemented to create a more advantageous operating ecosystem and catalyze growth. Changes in market economics, regulatory environment, and competitive landscape will create further growth opportunities throughout the value chain.
How can India become a global hub for defense manufacturing?
India needs to increase its focus on research and development if the country wants to become a global hub for defense manufacturing. While the country’s overall defense budget has seen a year-on-year uptick, the research and development investment is less than one percent of the GDP. Ideally, this data point should be doubled, and the annual budget should include R&D as a separate expenditure to ensure allocation and spend. There is a significant disparity when you compare the pace of modernization and the low spending on R&D and domestic production. If the country wants to be a leader, it should embrace cutting-edge technology and work with private entities to up the ante.
While the Defence Research and Development Organization (DRDO) operates 51 laboratories, the privatization of some of them could result in greater efficiencies. Privatization has the potential to introduce updated technologies and state-of-the-art capabilities. It can also ensure that quality and production are better managed and that budget funds for R&D are utilized effectively.
India should build an ecosystem of a strong supply base and engineering competencies to increase indigenous content not only for the Indian market but for the global market as well. Currently, we have multiple new programs in the country, right from design, development, manufacturing, and ship to customers and this needs to remain a central part of aerospace and defense manufacturing. However, we should also focus on the certifying of raw materials so that we can reduce our dependency on imports over time.
What do you think is the government’s role in making India an aerospace manufacturing hub?
The government’s role in this endeavor would be largely in terms of policymaking and fund allocation. They need to find ways to disrupt a large but slow-moving industry and this they can do with the implementation of strategic well thought out incentives that encourage private and public players to collaborate.
The pandemic had an impact on the Indian aviation industry, just as it had on any other country in the world. Despite this, several initiatives are currently underway to get the sector up to speed. We recognize the government’s emphasis on aviation infrastructure development, and we look forward to contributing to the sector’s growth in areas such as the connected aviation ecosystem for India’s aviation infrastructure needs.
Collins Aerospace has been a trusted partner for multiple governments and military missions such as providing everyday flight support services, regardless of where they are flying to. We will endeavor to remain a trusted partner to the clients and government in India.
How can we boost the growth of the aerospace industry in India?
The COVID 19 pandemic has created huge challenges for global industries, including aviation. But even before the pandemic, digital, technological, and engineering improvements were changing the world. These factors are restructuring every industry and in particular, the commercial aviation and travel industries. To revive the sector, the aviation industry will have to introduce changes to instill confidence, such as that of contactless travel.
How does Collins Aerospace plan to match steps with Make in India and Atmanirbhar Bharat?
Collins Aerospace has a strong presence in India, with products and services that include all of our strategic business units (SBUs) which include Customer and Account Management, Engineering and Technology, Aftermarket Services, Strategic Development and Operations, and Quality, among other SBU’s.
Collins’ operations in India started in 1997, with the establishment of a manufacturing facility in Bengaluru. We then expanded our footprint in the country, with the setting up of the Hyderabad/Bengaluru India Design Center and the Bengaluru Global Engineering Center.
Local and foreign governments, aerospace original equipment manufacturers (OEMs), and defense contractors are among the customers served by Collins sites in India. We offer engineering, system design, and product development services to assist our customers in achieving faster time to market, lower program or project life-cycle costs, and high-quality creative solutions.
Collins is one of India’s leading exporters of aerospace products. Over 235 patents have been issued by our talented India team, covering inventions from all Collins SBUs and disciplines. Collins Aerospace has been instrumental in building the overall Indian aerospace sector by developing suppliers and offering superior products and services.
With the support of the FAA and the DGCA, we were able to become one of the first Indian companies to domestically manufacture and export an aviation product to the United States.
We have also successfully built, developed, and certified the A320neo and Bombardier C-series power door opening system at our Bengaluru facility.
What are your thoughts on government policies for the aerospace sector?
The Indian government has been introducing some very forward-thinking policies for the aerospace and defense manufacturing sector. They have made a significant contribution to building self-sufficiency in the country by placing faith in private players and inviting global companies and OEM’s to set up shop in the country. The opportunities to grow in repair, maintenance, redesign, and component manufacturing are huge and can become critical areas of focus. The recently introduced new Defense Acquisition Procedure recognizes MRO as a key component and encourages Make in India.
The government should encourage the private sector to invest in R&D and manufacturing. The need of the hour is for countries to collaborate on policies that promote foreign investment, share technologies, and develop synergies, among other things.
PM Modi continues to support the government’s multiple initiatives to boost domestic manufacturing, such as Make in India, Digital India, and Skill India. This sends a positive message to global aerospace companies, encouraging them to work in India.
Reducing the corporate tax from 30% to less than 25% and reduction of tax on MRO to 5% puts India at a vantage point at par with most other attractive investment destinations around the world. With a large English-speaking young population, India does offer a viable investment opportunity today.
With the active participation of global players, the Indian aerospace industry is expected to develop exponentially. To meet the needs of tier-1 suppliers and create a cutting-edge aerospace industry ecosystem, manufacturers from around the world are already collaborating with Indian suppliers and small and medium enterprises. It is a fantastic opportunity for both new and existing businesses.
India occupies a vital and strategic space in the global Collins Aerospace narrative and we as a company are committed to support the Atmanirbhar and Make in India initiatives.
How do you see the advanced technologies and their impact on the aviation and defense sectors?
COVID-19 is one of the biggest challenges aerospace and defense companies have ever faced. While the impact of the pandemic is not evenly spread across the industry, all organizations will need to adapt to a post-COVID world with the adoption of new technologies and processes. It is interesting to note that their adaptations were already underway even before the pandemic began.
According to a global survey conducted by Deloitte to assess the current state of Industry 4.0 adoption across manufacturing industries, 84 percent of A&D executives said they consider leveraging new digital technologies as key to market differentiation but only a quarter of the A&D companies are currently using these technologies and tools to access, manage, analyze, and leverage data from their digital assets to inform decision-making in real-time. We see these technologies making a huge difference in the way the industry functions.
Advanced technologies will only be adopted more and more as we move into the future. They bring in radical efficiencies and operational benefits that were previously unimaginable and they are here to stay.
How do you see India as a market for global players in this space?
We can expect an active participation of global players that will further boost the growth of the aerospace industry in India. Currently, we see global manufacturers actively partnering with SME enterprises and local suppliers in India to build a healthy and state of the art aerospace industry ecosystem. It presents a great opportunity for start-ups as well as established players.
India holds a lot of potential and if planned well and executed effectively, we can definitely be one of the leaders in the aerospace manufacturing vertical.