Aero show opens up new opportunities for manufacture in defence industries

AK Ramdas 19 February 2015

The Aero Show in Bengaluru is expected to open up opportunities for making a whole range of defence-related products and services in India not only for domestic consumption but for exports as well

The 10th Aero India International was inaugurated by Prime Minister Narendra Modi, at the Yelahanka Air Force Station, Bengaluru, watched by delegates from 33 countries, representing some 328 companies involved in the defence industries. The US leads with 64 participating companies, closely followed by France (58), UK (48), Russia (41), Israel (25) and Germany (17). In support, it is reported that as many as 328 companies from these countries have sent their representatives, while 295 counterpart Indian companies are also in attendance to take advantage of the opportunities available during the five days show.

While inaugurating the show, Prime Minister Modi emphasised need to increase the domestic procurement of defence materials from the current 40% to 70% level, in the next five years, if not earlier! This Aero Show is expected to open up opportunities for making a whole range of defence-related products and services that can be made in India not only for domestic consumption but for exports too.

According to the media reports, India secures most of its advance defence needs from abroad and is expected to spend over $120 billion in arms acquisition over the next decade. The Budget for defence between 2014 and 2022 is an estimated $620 billion, 50% of which is likely to be on capital expenditure. In order, therefore, to increase foreign participation, the government, which had restricted it to 26%, has suitably increased it to 49%, as this may encourage more inflow and interest in this area. There is adequate supply of raw materials and increasing number of skilled personnel, every year, which would "Make in India" a practical proposition. Besides, there are hardly any restrictions that would prevent the import of certain essential components that need to be brought from outside for incorporation in the final finished product, particularly for export!

In fact, one the major defence deals involving the manufacture of 126 Rafale fighter jets is expected to be finalised in the next few weeks as the French negotiating team arrive in March, to meet the team at Hindustan Aeronautics Ltd. HAL will also be associated with BAE Systems plc, Europe's largest defence contractor for the manufacture of 20 Hawk aircraft.

It may be noted that HAL currently manufacturers various types of aircrafts, and also are making 25 to 30 helicopters, both for military and civilian use. The government has plans to make 338, and, according to Defence Minister, Manohar Parrikar, private companies will also be roped in to make this possible.

Among the Indian business community, Anil Ambani is reported to have said that his Reliance Group has plans to build a defence smart city, covering an area of 5,000 acres, to be able to house a fully integrated defence and aerospace infrastructure facility. This is expected to secure a piece of cake in the estimated $100 billion worth of defence related business that this sector would offer, in due course. According to the press, Reliance Defence and Aerospace (RDA) is likely to bid for 387 Army Reconnaissance & Surveillance Helicopters and 100 Naval Utility. Helicopters, estimated to be valued at about Rs25,000 crore!

Manohar Parrikar is reported to have said that the defence procurement procedure, covering various aspects, including the issues of middlemen and lobbyists will be made ready soon and this will make business in this area clear and transparent.

He has confirmed that Yelahanka, Bengaluru, has been chosen again to put up the 2017 Aero Show. It is expected that this will attract even more new players in the defence related area, who would be able to assess the opportunities for making products in India for local supplies as well as exports, in the next two years!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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