Category Archives: SME

Quality awareness in Indian products

Recently, a German manufacturer refused to manufacture in India because he wasn’t convinced of Indian ability to meet his quality standards. He compared a simple switch board that was fixed crooked at an Indian public office to a German one that was perfectly in place. A UK based designer working with Indian textiles recently refused to source his products locally from Indian weavers due to lack of quality. This is in spite of the fact that bulk manufacture of Indian embroidery and textiles has a potential to woo international market. A customer at a jewellery store was disappointed with a custom-made silver plaque that was badly crafted despite initially promising good quality, and rejected the piece.

In India, you and I observe this lack of quality awareness in everyday life – be it with household equipment or a garment. In the examples quoted above, all it needed was quality awareness on the part of the electrician who fitted the switch board on the wall – he needed to not only know what was straight and what was not, but also feel the pride and confidence in his own work to ensure that he fixed it straight. The artisan creating the decorative plaque needed to feel pride in his work to ensure that he crafted a perfect piece – and the salesperson needed to know that if the piece was not good enough, he should not have even offered it to the customer as the reputation of his business was at stake.

So, what is good quality? Quality is not just a certificate (such as ISI or BIS) that can be given to products. It is an attitude that reflects the DNA of an organisation or an individual. Sadly, today the spheres of knowledge and performance do not work in synchrony. This emphasises the increasing need for quality awareness in the entire population, whether a factory worker, artisan, salesman or manager.

Holding financial constraints responsible for lack of quality is certainly not justifiable. A sense of pride in work and ownership associated with one’s work can overcome most constraints.

Craftsmen and technicians in India suffer from a lack of exposure to quality in production. The present day social environment has poor esteem for a blue-collar job in all work places across the country, and has very little respect for the dignity of labour. This acts as a demotivating factor for workmen and is hurting India in many ways. This is where China and other countries have an edge over India. Today, China maintains a work culture that is unbiased and treats as equally valuable, the contribution of every type of workforce.

Change must begin with the individual and spread across organisations. Even an average technician must be aware of good quality. He must hold a sense of pride in his work. Quality begins with design and continues through workmanship in the production process right to maintenance and customer service. China, which has a GDP five times that of India and a manufacturing sector ten times bigger, had a reputation some years ago in the international market, of producing poor quality goods. China has overcome that stigma by going on a war-footing and drastically improving quality. Here in India, if a locally produced item is shoddy and lacks basic attention to detail, we can neither aspire to ‘Make in India’ nor transform India into a global manufacturing hub.

The ‘Make in India’ initiative needs to leapfrog over the initial pitfalls of poor quality that China faced, and establish a global reputation of ‘High Quality’ for goods produced in India. This can be only achieved by a concerted parallel effort on several fronts, quality awareness being one of the foremost.

Challenges for MSMEs in HR strategy in the wake of ‘Make in India’

‘Make in India’ primarily focuses on manufacturing products in India. It is logical that this should include ‘Design in India’, ‘Innovate in India’, and ‘Support in India’. This therefore requires a holistic approach to not just managing HR, but creating HR right from schools, colleges and training institutions. Though this is a highly demanding task, there is no way we can avoid this. It is the only way that Make in India can succeed. Further, all these activities result in multiple areas of challenges as well as opportunities. The Governments (Central & State) too have their part to play in improving Industrial Relations and Labour laws, since manufacturing will certainly have to percolate to the smallest of MSMEs.

While MSMEs employ 40% of India’s workforce, contributing 45% to India’s manufacturing output, the main problem that they face is the lack of talent – most employees are non-employable for industry needs.

I foresee that soon, there is likely to be such a huge shortage of trained manpower across all levels of the manufacturing sector (operators, supervisors, managers, designers, etc.) that HRM itself can be a challenge for each organisation, especially the smaller ones. HRM will have also to build stronger bridges with educational/training institutions.

At a primary level, flaws in education system cost MSMEs a lot of their resources. Engineers, diploma holders, technicians, operators and clerks need to be given skills that train their mind to analyse and apply, before they can be productive. With this also comes the need to remain relevant at any point in the industry – therefore, the need to upgrade skills periodically. This applies equally to non-productive jobs like accounts and administration where online filing of monthly VAT returns as well as transportation documents are now mandatory in most states.

At a basic level, educational institutions are to be blamed for their flaws in skilling manpower. This, unfortunately, starts right from school. There must be a re-evaluation in the system with focus on understanding and application of skills rather than marks based on rote learning. The management in colleges remains unaware of industry needs and fails to incorporate skills that are required for industry. Thus fresh recruits from colleges lack skills to apply the knowledge gained – some even lack good foundation.

Graduating students are attracted to large MNCs which filter out the few who are capable of being employed. The Micro and Small Enterprises (MSE) are thus left with students who are not qualified for industry needs. If MSMEs employ their scant and precious resources of time and money into training their recruits, then employee retention becomes a problem. Skilling them would make them capable of meeting needs of larger organisations and MNCs. For fear of attrition, MSEs are reluctant to impart the necessary training, besides the time and cost constraints. Such a situation is clearly unhealthy.

The government has recognised the need for skilled manpower. ‘Skill India’ program was launched keeping in mind that only 2.3% of Indian workforce has undergone skill training. While these programs are viewed as being complementary to ‘Make in India’ initiative, they yet again focus merely on low-level skilling of fitters, plumbers, carpenters, technicians, etc. Skilling of graduates – especially engineers, has not been addressed. Further, the essential skills of critical and analytical thinking are not imparted, leading to a talent vacuum in the mid- and higher management levels of any organisation. This is felt most acutely in an MSME.

The growth of MSMEs is already challenged by lack of financial resources, poor infrastructure, and periodic and unfair harassment by various statutory bodies. However, the core problem to be addressed remains that of unskilled manpower.

We need to have a broader vision of Create, Innovate, Design and Make in India. To enable this vision become a reality, Industry, Academia, and Management experts need to work together to create a vibrant pool of real talent – talent that has strong basic knowledge of a domain, along with the skills for critical and analytical thinking. It is the development of these skills that will ultimately lead to the success of ‘Make in India’.

LCA-Tejas-15

Another Chairman of HAL talks

HAL seems to have finally realized that it needs to be a final integrator after all! Or has it?LCA

(http://m.thehindu.com/news/national/hal-seeks-to-lighten-light-combat-aircraft-burden/article7617119.ece) It now wants to offload major parts of the airframe to the large private players. We can now see the ‘biggies’ trooping to HAL to have a bite of the various platforms that HAL has been struggling to deliver to its reluctant customers.

How sincere is HAL when it makes such statements? I say this because this same intent has been repeated over the years ad nauseum without any action on the ground:

2002: www.thehindu.com/thehindu/2002/06/13/…/2002061301830400.htm

2003: www.thehindubusinessline.com/2003/02/12/…/2003021201020200.htm

2005 August: www.thehindubusinessline.com/todays-paper/tp-logistics/outsourcing-bonanza-in-aviation-hal-alone-sets-rs-600crore-business-for-private-sector/article2185343.ece

2005 October: www.thehindubusinessline.com/…/haloutsourcing/article2193883.ece

If anybody thinks that this would make an impact on the Indian military aerospace sector, they are going to be sadly disappointed once again. All that this would achieve is to allow the large private players to put in place a certified system of producing airworthy structures, besides churning out riveted airframes and that too out of jigs and fixtures to be transferred to them by HAL. What nobody seems to notice is that a large part of a flying platform comprises its accessories and systems, including the most important power plant (engine), that really determines the flying as well as fighting capability of that aircraft. Onboard systems constitute about 25% of the acquisition cost of a military aircraft and along with the power plant, they account for 50% of the total cost. These also need maintenance and upgrades over the long operating lifecycle of at least 35 years. Considering that such systems can be tailored and modified to suit multiple aircraft, this constitutes the core of the aerospace industry. So, isn’t it silly that we are still talking only of manufacturing the shell and nothing about indigenous development and manufacture of all airborne systems such as avionics, electrical, hydraulics, pneumatics, air-conditioning and pressurization, cockpit instruments, weapons control, etc?

The Lucknow division of HAL was established out of the need for self-reliance in the development of accessories and systems. It has miserably failed to meet its mandate and hence this is where a multi-billion dollar opportunity exists for a large number of MSMEs alone. They can do wonders if pool their knowledge base, collaborate and synergize with each other and HAL can benefit by this too. This could lead to the creation of multiple consortia across the country each of which could be a potential exporter over time.

It is interesting that the CMD, HAL has talked of hand-holding. Let us look at their past track record. Five years ago, two divisions of HAL (Nasik and Lucknow) cancelled their outsourced manufacturing orders to a small private company stating that the labour unions had objected to outsourcing of work to the private sector. This was after going through a whole process of tendering, L1, price negotiation, and release of formal Purchase Orders. Is the CMD of HAL now sure that this will not happen again? Or, would the divisions now go to the unions to plead with them?

Talking of the 2600 SMEs that are supposed to be supplying parts to HAL, has anybody wondered what quantum of business each of these SMEs derive from HAL? If they are only manufacturing bolts and nuts, they could certainly graduate to aggregators by putting them together into a bracket or sub-assembly. That’s not what the SMEs would like to aim at. This precisely has been the problem with HAL. They never seem to be able to recognize the huge potential that lies untapped among the many competent and highly capable MSMEs of this country. Had HAL encouraged and facilitated the formation of clusters of MSMEs two decades ago, these would by now have graduated to system integrators, with each cluster delivering a communication or navigation or hydraulic system.

Why has HAL done nothing to support and encourage the existing MSMEs, many of whom are CEMILAC certified, who have already demonstrated their capabilities by manufacturing complete airborne equipment? Why does HAL not realise that creating such an ecosystem would be a force multiplier?

Indigenisation

Import Of Aircraft Spares – Is This ‘Make In India’?

There has been a news item in the last two days on HAL signing an MOU with BAe, UK, for spares support for the Hawk trainer as well as the Jaguar. If we hark back 40 years, HAL manufactured the Jaguar under licence from BAe. Logically, over these 4 decades, HAL should have developed indigenous sources for the spares for these aircraft. It has obviously not happened. This is a classic example of the myth of ‘Transfer of Technology’.  Many questions therefore arise from the announcement of this MoU.

What is the penalty that the country (and its tax paying public) paid with its precious foreign exchange for the maintenance and overhaul of these Jaguar aircraft over all these years? For, the OEM has surely charged HAL and the IAF exorbitantly for each spare part.

Did HAL attempt indigenisation of critical spares of Jaguar over these four decades? If so, what were the reasons for going back to BAe for spares? There was enough time for HAL to indigenise hundreds of spares that could also have enabled Indian vendors to develop similar parts and equipment for the LCA, ALH, Mirage and others. If all the divisions of HAL, at Bangalore, Lucknow, Korwa and Hyderabad could not indigenise the parts, why could it not have at least contracted it to a private player, even MSMEs? Radel Advanced Technology, an MSME has successfully indigenised many equipment including for the Jaguar, at a fraction of the cost of imported ones. So the question is, has HAL failed in skilling its engineers in indigenisation, or has it failed to give enough importance to the issue?

When on the one hand, the Government talks of ‘Make in India’ and on the other, a prestigious defence PSU actually signs an MOU for spares support for a 40-year old aircraft, it becomes clear that there is either a lack of capability or a lack of will to indigenise, design and manufacture in India.

Under these circumstances, how can we claim that we have produced an ‘indigenous’ LCA? This raises an even more worrying thought – were we fooling ourselves by wanting to make the Rafale in India? Even if we do, under licence, will we not be in the same boat as we are with the Jaguar and the Hawk today?  Doesn’t this MOU prove that HAL has failed to assimilate even 40 year old technology over all these years?

Looking ahead, how do we develop the capability to design and manufacture aircraft that are completely indigenous?

The solution lies in taking multiple steps:

To begin with, the determination and will to design and produce an indigenous aircraft as well as all its on-board systems, over a limited time frame.

Ensuring that the supply chain for the manufacture of the complete platform is in the ratio of 80:20 where 80 is the share of the tier 1, tier 2 and tier 3 suppliers, and the lead organisation retains only 20% – the important major part of integration, testing and delivery.

Steps to indigenise all spares for all the aircraft concurrently with the aircraft manufacturing programme, through the process of identifying and promoting MSMEs as suppliers for these – in this process, streamlining and expediting the lengthy and often infructuous tendering process, with the specific intention of achieving the stated goal.

A strong leadership within the PSU to take these steps forward and drive it down the whole organisation. With the right attitude and determination, we can do it. If we can indigenously design and execute the Mars Mission, we can design our own fighter aircraft too.

SMEs

How do you integrate SMEs into the Indian Aerospace and Defence ecosystem?

Let me ask a question myself, what is an ecosystem? The ecosystem is one that encourages the growth of a particular sector of industry or product. So the ecosystem includes either the creation or existence of the infrastructure which includes again for design and manufacture, the manpower trained to handle the technologies involved, facility for training the manpower, test facilities, certification, processes, a supply chain, availability of specialised raw materials if there are any, and so on – it can be expanded without much of a limit. So the ecosystem as applied to the aerospace and defence includes the inclusion of all these parameters. And with particular reference to the aerospace sector which uses very specialised aluminium alloys, titanium alloys, rivets, nuts and screws that needs to be of special grade or tested grade and certified as airworthy. Now if we don’t have any of these present within the country, then the ecosystem is missing. Even in the case of availability of trained engineering manpower, we don’t have the ecosystem where you have either aerospace engineers or mechanical engineers trained for working or operating in the aerospace sector. So we don’t have the availability of these various kinds of resources in the country and therefore the aerospace and defence sector in the country is unable to grow to the extent that it needs to grow. This is where the creation of ecosystem is extremely important and therefore the Government is the one that needs to address these by setting up of laboratories, test facilities, training institutes or may be even incentivising SMEs or large organisations to conduct training programmes, seminars, workshops etc etc. And this is where the Government has to play a very major role in incentivising and facilitating the growth of the aerospace and defence sector in this country.

Indian Aerospace SME

Is ‘Technology Transfer’ required for Indian Industries to succeed in MakeInIndia?

I am one of those who believe that we do not need any transfer of technology at all. In the past we had transfer of technology as part of projects that we got from British, Russian the French and many other countries.  These were for the licensed manufacture of aircraft, transport aircraft, fighter aircraft, battle tanks and trucks,  for example Tatra. But then we have not taken the additional steps of extracting information and knowledge that we have got, that we have paid for, and then taking the next few steps to develop  them and create our own technologies. There is no rocket technology or rocket science involved in routine equipment, be it a communication equipment, navigation equipment or power plant.

The only area where there is high tech science involved is in the design and manufacture of advanced jet engines that are required for a jet aircraft. If you leave that aside, all the other equipment and systems that go on board on aircraft or battle tank are available with us. If we have been able to put satellite around Mars or If we have been able to land a satellite on to the surface of the moon then what is it we lack?

It is only the question of applying the science that we learned, and designing our own products, trying them out, if there have been deficiencies, use the knowledge gained and improve upon it, and then reach the ultimate goal of having our own equipment, systems as well as the platforms. This is what we need to do and there is absolutely no need for us to go out of this country seeking transfer of technology. After all, what is the technology we receive from abroad? They are only manufacturing technology for manufacture of an aircraft or its shell and stuffing it with equipment then that are imported from abroad. So we need to develop the equipment and systems that go on to the shell, and thereby increase the indigenous content of our platforms rather than go out again and get the technology for manufacturing of the shell, be it a 4th generation or 5th generation aircraft or battle tank. We need to look inwards and get the technology that is available within ourselves whether it is in our educational institutions or in R&D labs, for the manufacturing establishment. All we need to do is put our heads and hands together to solve our own problems.

Digital veena inventor who beefed up IAF’s firepower

An entrepreneur who has won a patent for a digital veena, and also designed a mechanism that fires rockets at a command from a computer aboard the Indian Air Force’s Jaguar aircraft? Incongruous but true. The entrepreneurial career of G Raj Narayan, 66, founder and managing director of Bengaluru’s Radel Group, has been guided by his twin passions – aerospace and music.

He spent 10 years as a design engineer at the state-owned Hindustan Aeronautics Ltd (HAL) before disillusionment turned the thoughts of this post-graduate from IIT Madras towards entrepreneurship. He finally left HAL in mid-1979.

Within three months he was sub-contracting for Bharat Heavy Electricals Ltd, supplying electrical coils after investing his savings of Rs 10,000 in a coil winding machine. Together, the group’s two companies – Radel Electronics Pvt. Ltd. (which makes security systems and musical instruments and accounts for 90 per cent of group revenues) and Radel Advanced Technology Pvt. Ltd. (the aerospace business) – employ 80 people and have sales revenues of Rs 10 crore.

Aero India 2015

Radel is still a small enterprise. But Raj Narayan is working with the aviation wing of the Indian Navy, and hopes to get business from the Army too, since Radel is one of the few Indian players to be certified by the Centre for Military Airworthiness Certification – a Defence Research and Development Organisation lab. “I am looking at 100 per cent growth in the next two years, possibly even 150 per cent, if ‘Make in India’ takes off.” Raj Narayan concedes that for nearly 10 years after he started in business, he continued with his “garage mindset”, and it was only when he won an award for electronics in 1987 that he thought, “I must shift to an industrial estate in order to become a bigger player.”

He has taken care to ensure that R&D is Radel’s core strength. “The R&D team gradually grew, but took a quantum jump when the company set up its facility in Electronics City in 1995. The team now has about 16 engineers who design the electronic circuits, the software, the printed circuit boards, the mechanical housings and structures, the plastic cabinets and everything else that contributes to complete product design,” he says.

The disadvantages of being small are repeatedly felt. Though his aerospace company alone has orders in hand worth Rs 1 crore, working capital is hard to get from public sector banks. However, Raj Narayan turned one such disadvantage into a business opportunity. He found it hard to recruit engineering talent. Moreover, new recruits, once trained, would soon depart for greener pastures. So he set up the Drona Centre for Excellence as a division of Radel, “primarily to produce trained and productive engineers out of fresh graduates”.

Since Radel also possesses core aerospace domain expertise, “Drona also offers training courses in avionics systems, besides electronic product design. This allows the trainees and engineers a hands-on exposure to live projects that they can also see physically implemented for a real client,” says Raj Narayan.

This finishing school is the group’s third revenue stream, and so far it has taken in two batches of 30 students each and trained them, after which they were free to leave and join other companies. The centre also holds short-term courses for engineering students during their holidays.
Though in his mid-sixties, Raj Narayan intends to continue at the helm of Radel for six or seven years more. “I am in the process of grooming a second line of leadership, who can take over when I retire,” he explains.

The original article appeared on Business-Standard

Aero India 2015

Role of Government to facilitate the active participation of SMEs


The Government of India needs to nurture and assist SMEs with proven track records. SMEs who have specialised in their own domains which may be electronics,hydraulics, pneumatics or mechatronics and so on need to be provided facilities of interacting with government agencies, manufacturing establishments, DPSUs, so that they get familiar with defence technology and the specialization involved in those technologies. They would then be able to provide their services or products that can be integrated into the holistic platform. The government also needs to create a new classification of A&D SMEs. This is very important because, once a special classification of a defence SME or an aerospace SME is established, that SME could be entitled to special incentives, funding packages and so on.

The government also needs to create R&D funding facilities for those SMEs involved in design and development of products that will result in significant saving of foreign exchange, because ther imported equipment are very expensive, not only to import but also to support as a part of maintenance. The Government will then have to facilitate the formation of Defence clusters along with their own self-contained common facilities centres across the country. The Government should also simplify the import and export procedures because quite a significant amount of materials, especially electronic components are imported and the procedures of import by paying duties and then claiming the duty drawbacks etc. are very cumbersome. Finally the government would do well to provide some tax incentives to encourage the participation of SMEs into the priority sectors, that is, defence and aerospace.

Aero India 2015

Making in India, for aerospace and defence

As of 2013, aerospace and defence (A&D) offsets are reported to have generated business worth $3.5 billion. While it is true that in value-terms, most of this is accounted for by a relatively small number of SMEs, it is undeniable that a whole range of Indian SMEs now have genuine exposure to global markets and standards.

The fact that ‘build to print’ type of orders are growing for Indian SMEs shows that this segment of the A&D market has now matured to fulfill stringent global aerospace standards while remaining competitive on cost.

 Given that A&D majors across the world are looking to pare costs by up to 20%, this is something that is obviously attracting the attention of many global players. Overall, although SMEs have benefited by engaging global value chains, it is now time for them to raise their capabilities to higher levels of value addition. This would enable them to penetrate deeper into the global market. As a by-product, it would also enable them to participate in a massive indigenisation push under the Make-in-India scheme.

Among today’s MSMEs, we see strong capabilities in precision CNC machining, electronics manufacturing, design of mechatronics, industrial product design, hydraulic valves and actuators, CNC sheet metal fabrication and forming, precision plastic moulding including design of moulds, software development, etc., not to mention the specialised advanced skills possessed by MSMEs already integrated into the supply chains of A&D establishments. The few Indian MSMEs doing business with global A&D companies are already certified AS9100 and are able to meet global quality and delivery standards. Indian firms in the automotive sector have established a solid international reputation for a while now. Some SMEs in India have already achieved noteworthy quality stamps by using practices like 5S, TQM, and JIT through their concurrent involvement in the automotive components industry.

GRajNarayan's Blog

The success of such SMEs has greatly improved the overall image of Indian SMEs. This has prompted global companies to look for outsourcing to India, with the obvious advantage of lower costs.

 Now, the need is to elevate such SMEs to the A&D sector through orientation and exposure to the specialised stringent quality, procedures and standards. There are quite a few success stories involving SMEs in the A&D sector. One SME has indigenously designed and developed weapons control equipment for the Jaguar fighters of the IAF and many ground test jigs that would otherwise have been imported. A few other items indigenously developed by SMEs are Flight Data Recorder for fighter aircraft, precision hydraulic servo valves, multi-function displays (MFD),  that form part of sophisticated aircraft systems, wire harnesses, etc. In spite of these achievements, SMEs are understood to be meeting only 20% of the indigenous content in our defence equipment. This points to either their under-utilisation or that the lead integrator, be it a DPSU or a large private-sector enterprise, withholds all the high value-addition to itself.

 Tweet this: “The Make-in-India campaign adds a new dimension to the indigenisation programmes in the Indian A&D sector and increases the relevance of the SMEs manifold”.

 This opens up opportunities for SMEs to learn from global experience and applying their new-found skills in the massive opportunity for indigenisation. The strong competencies across a wide spectrum of SMEs need to be leveraged via clusters for the A&D sector. In the past decade, the odd aerospace SEZ may have been formed in one or two locations. However, these do not comprise a group of industries with domain expertise across the entire spectrum of domains required for complete design and manufacture, either of the platform or its systems. Thus, the need is to move up the value chain from one-dimensional SEZ specialising in machined and fabricated parts, to the creation of multiple holistic A&D clusters encompassing all domains, across structures and systems that include avionics, hydraulics, pneumatic and electrical domains.

These are yet to be formed. It may come as a rude shock to many that a wide variety of screws, nuts, bolts, rivets, etc. are imported from abroad even to this day, although hundreds of SMEs have the capability to meet this requirement. This fact points to a lack of holistic approach to indigenisation and self-reliance.

However, even as SMEs have come a long way from being ‘garage’ operations they need serious government support in terms of priority lending dovetailed to mitigating the risks associated with design, engineering and R&D efforts. Innovation and design capabilities, though crucial to stay in the game in the aerospace sector, might entail large expenses, relative to the size of SMEs. Timely availability of capital on favourable terms will make future SME growth prospects much brighter.

Further, there has to be greater integration of SMEs with domestic OEMs in the A&D space. This would greatly strengthen the delivery capabilities and market reach of A&D SMEs in India. Currently, two SME exchanges are being set up to facilitate easier access to capital and an ‘India Opportunities Venture Fund’ worth Rs 5, 000 crore is being created through the Small Industries Development Bank of India. While these are necessary steps in the right direction, more needs to be done if the Make-in-India push has to deliver a globally competitive Indian A&D sector.

The Original Article appeared on Financial Express

Aero India 2015

Tie up with Indian SMEs with proven track record at Aero India 2015

The Indian Aerospace and defense manufacturing sector is at the cusp of change today, with the entry of large private players and strategic alliances, mergers and buy-outs being the order of the day. Aerospace giants like Airbus, United Technologies Corporation, Lockheed Martin and Dassault Aviation have been closely looking at the Indian market and companies they can partner with. As these companies look to build an ecosystem of Indian firms whom they can outsource their global work at competitive rates and through whom they can cater to the domestic market when orders from the Indian Armed Forces materialise, they can no longer afford to depend on the monopoly public sector giants or a few large players.

In fact, it is in the interest of these global corporations to recognise early that these form the tip of the iceberg and hundreds of Small and Medium Enterprises in India support public sector organisations like HAL and contribute significantly to India’s Aerospace and Defense manufacturing sector.

With the increase in the FDI limit to 49%, global leaders in A&D manufacturing are now eager, more than ever before, to add Indian suppliers to their global supply chain. This would definitely benefit them as they are likely to find some robust partners in small and medium sized Indian enterprises that have executed indigenous projects and have proven expertise, spanning many years.

GRajNarayan's Blog

Digging a little deeper will unearth a few such hidden gems, correcting the misconception that SMEs operate at the lower end of the value chain. There are a few Indian SMEs who are not just component manufacturers but are seen adding value at multiple stages including design, development and high value manufacturing in the aerospace sector. In addition, several Indian SMEs now have the strong technological base to meet global demands and standards, an international business outlook, a competitive spirit and a willingness to restructure which makes them a perfect partner to look out for.

Large domestic players are also broadening and strengthening their competencies and resource base through the process of acquisitions and mergers. They are also looking to forge partnerships with key suppliers in the 2nd tier. The Make in India campaign has undoubtedly added impetus to their growth aspirations. It is important that SMEs take stock of this paradigm shift and gear up to leverage the opportunity.

Seven essentials to look out for in an Indian SME partner:

  1. Proven track record in the Aerospace domain.
  2. Capability to design and fabricate jigs and fixtures required for production and testing.
  3. Evidence of a strong and robust quality assurance culture built into the organization.
  4. An organizational culture that encourages learning and training of its employees and managers.
  5. Passion and sincerity of purpose among its main promoters in the field of A&D.
  6. Adherence to committed delivery schedules.
  7. Professionalism and high ethical standards in their communication and operations.

To truly leverage the combined potential of a liberal offset policy, India’s advantage in skilled manpower, and relatively low cost manufacturing, it is essential to integrate SMEs into the ecosystem. Aero India 2015 could just be the right opportunity for the industry to move in this direction.