Immense Prospects for Private Sector in Aerodef

As India provides robust infrastructure, exceptional port logistics, industrial corridors, availability of land, availability of power and a conducive environment for business, the developments can be expected to progress rapidly.

Favourable policies

India’s aerospace and defence segment is evolving. It is attracting all major names across the globe in terms of investments. With the Government of India bringing to the fore investor friendly policies and providing space for investments the prospects for growth are brighter than never before.

Significant factors fuelling growth are the government’s offset policies, robust pool of workers, cost advantages and so on. Aerospace and defence business which until now was largely centered on public sector is now open for private firms as well.

The Government of India, in line with its Make in India policy has given prominence to local industry by making it as the centre for defence production which creates a tremendous opportunity for the private sector.

Defence-private connection

Indian private firms making use of the opportunity have signed developmental contracts with the Ministry of Defence. Notable ones include Tata Advanced System for surface surveillance radar project for the Indian Navy and Larsen & Toubro for production of guns for the Indian army.

To be in sync with its Buy in India, Make in India mantra the government has given impetus to local manufacturing. The government has announced that it will launch around six to eight “Make” projects every year which raises the prospects for greater involvement of private sector in defence manu-
facturing in the years to come.

As per the Ministry of Defence so far the government has issued 342 industrial licenses to 205 Indian companies and until now 66 licensed companies have reported commencement of production. The defence items produced by these companies are sold to the Ministry of Defence.

Boom in Aerospace

Interestingly the Indian aerospace sector also shares a similar story.

It is the motto of the Government of India to domesticize the aerospace industry, attract global players and lower dependence on imports in the sector. India’s share of the global aerospace industry is around $250 million. It is still a fledgling industry but with high growth potential. As per a joint report by IESA, NASSCOM and Roland Berger the total opportunity in aerospace and defence market may touch around $70 billion by 2029.

Opportunities abound

Giving wings to the Make in India policy is the number of private sector companies marking their presence in the aerospace sector through joint ventures. Examples include: Adani Aerospace and Defence which is setting up a modern aerospace ecosystem in Mundra, Airbus partnership with Tata Advanced Systems for final assembly of C295W military transport in India, Airbus partnership with Mahindra Defence for production of airbus military helicopters, Israel Aerospace Industries and Kalyani Strategic Systems joint venture to manufacture and market the Israeli firm’s defence systems.

India’s defence needs is still met through imports and it is one of the largest importer of conventional defence equipment. National security and geo-political requirements necessitate the need to build additional capacity through investments. The opportunity is knocking on the door and private sector could play a vital role across the aerospace and defence value chain in terms of research, design, development, manufacturing, maintenance, quality control, training, and so on.