Tag Archives: Aerospace component manufacturers in Bangalore

Defence Procurement Procedure’s new avatar inspiring; some players seek more tweaking

The much-awaited changes to India’s Defence Procurement Procedure (DPP) were announced last month. This was in line with the promise made by Defence Minister Manohar Parrikar, after he took over the reins of Ministry of Defence in November 2014. The new look DPP, set to take shape in the next two months, gives major impetus to the Narendra Modi government’s flagship Make in India mission. It has some inspiring elements to boost Indian private companies to undertake research and development in the aerospace and defence (A&D) sector.

One India elicited the views of some of the private A&D players to capture the mood of the industry, which has always felt that enough is not being done to win their hearts. Here are the excerpts from a series of interviews we did recently. Offset mechanism not working in interest of country G Raj Narayan, Managing Director of Radel Advanced Technology (P) Ltd, has been a visible voice in the last couple of years in various A&D forums. He says it was clear from the beginning that the offsets mechanism wasn’t working to the interests of India. “The insistence of the foreign OEMs to dilute the same on the pretext of ‘not finding capable Indian partners’ was only an indirect method of preventing any exposure to Indian companies on related technologies. The only way to improve our state of self-sufficiency is to develop R&D in-house and design from whatever technologies we are presently exposed to (LCA, Jaguar & Mirage), and then move upwards to higher levels indigenously,” says Raj. According to him, the raising of the offset applicability to acquisitions of Rs 2000 crore and above is irrelevant. “The higher preference to ‘indigenously designed, developed and manufactured’ items certainly makes more meaning than the vague ‘Make’ and ‘Make & Buy’ categories. This is a confirmation of the preference for Indian products which needs to be applauded. Further, the focus on enabling and empowering R&D as well as supporting MSMEs through funding is a huge step forward. Though this could still throw up problems in distinguishing between ‘mature and capable’ MSMEs and ‘raw’ MSMEs, proper processes could certainly be set up to ensure that the right company get the right amount of funding appropriate with its track record and status,” Raj added. Radel’s ongoing projects for various military programmes include, auto-selector bomb release system, speed switch, anti-collision lights, cockpit control unit and ground test rigs of various aircraft and helicopters. Introduction of IDDM a good move Puneet Kaura, MD and CEO, Samtel Avionics, says that the introduction of a new category — Indigenous Design Development Manufacturing (IDDM) – is a welcome move. “We welcome the move to introduce the IDDM category in the DPP as it will back companies like us who have proven competencies in indigenous design, development and manufacturing. Furthermore, the announcement of funding by the government for R&D purposes will help build a technology base in the country,” says Puneet, among the early players in the A&D sector. He said the growth of the Indian defence industry has been marred by delays. “The new DPP addresses this through a definitive step to cut down the delays in procurement by reducing the time lag between AoN (acceptance of necessity) and the tender or request for proposal (RFP),” says Puneet. Samtel through its joint venture with HAL, has been developing MFDs for Su-30 MKI within its facility in Greater Noida. The Samtel-HAL JV has already delivered 125 sets of MFDs for Su-30 MKIs. Will boost investments and better quality of products According to Rajeev Kaul, MD & Group CFO, Aequs, told One India that that take on LI policy in the new-look DPP is a positive step. “L1 policy is a bold move and it credits the capability of the bidder. This would encourage quality consciousness and boost investments in better quality products,” says Rajeev. Aequs has been supplying main landing gear shackle for the B787 programme. Aequs manufacturing facilities are located in Belagavi, Bengaluru, and Houston. Offset limit should be brought back to Rs 300 crore Col H.S. Shankar (Retd), CMD, Alpha Design Technologies Pvt Ltd, feels that increasing the offset applicability limit is a retrograde step and will deny Indian industry, particularly MSMEs, large chunk of their work content. “It is our view that offsets (with Rs 300 00 crore and above limit) was working satisfactorily (except for few glitches at MoD) and benefiting Indian Industries enormously. This will be a big blow to Indian industries. The limit should be reviewed and brought back to Rs 300 crore. He said the MSMEs/FICCI had listed many suggestions to the DPP Review Committee, but they were not accepted. “We wanted the ‘Make’ category to be split into two categories: ‘Make’ large industries with higher limits and ‘Make’ MSMEs with a limit of funding up to Rs 500 crore per project,” says Col Shankar. Commenting on the ‘strategic partners,’ the veteran A&D expert felt that it was a retrograde move of brining in ‘public sector mentality’ into private sector by reserving few big players in private sector. “This is a back door entry for big private sectors – something which Kelkar Committee had recommended as ‘Udyog Ratnas’ in 2016 and rejected and not implemented by successive governments,” says Col Shankar. MSME categorisation limits for A&D products must go up Naresh Palta, CEO (Aerospace), Maini Group, said the government funding of 90 per cent for indigenous R&D will spur domestic products and technologies. He also felt that ‘accepting offers in single tender cases’ would remove major hurdles for industries developing niche products. However, Palta felt that the DPP’s new avatar is silent on measures for SME segment. “We want the new policy to increase MSME categorisation limits up to Rs 150 crore for A&D projects specifically. Further taxation relief to Indian products vis-à-vis imports, for level playing. We are still unable to compete our products in the domestic requirements with imported ones due to higher duties and taxation incident,” says Palta.

The original article appeared on One India

New Defence Procurement Policy results in dynamic changes

In an attempt to streamline defence acquisition and give a boost to the “Make in India” initiative, the government on Monday approved changes to the Defence Procurement Procedure (DPP). This will give Indian private companies a chance to locally produce equipment and invest in research and development (R&D).

At a meeting chaired by Defence Minister Manohar Parrikar on Monday evening, the Defence Acquisition Council (DAC), which is the supreme decision-making body for the Ministry of Defence, allowed changes to the DPP after a one-year review, The Tribune said.

“Recommendations of the expert committee headed by former Home Secretary Dhirendra Singh were considered and most of them were approved,” Parrikar was quoted as saying by The Hindu.

As per the changes, the procurement policy of 2016 will have a new category — an Indigenously Designed, Developed and Manufactured (IDDM) platform. Under this category, if the design is indigenous, it will be mandatory to have 40% local content, but if the design is not local, 60% content will be mandatory.

Another major change to the DPP is “small and medium-scale industries will get opportunities,” Parrikar said. However, two issues have to be addressed: “The method of blacklisting for firms” and the “requirements for guidelines to select the correct strategic partner for producing equipment in India”. The DPP offsets limit has been increased from Rs 300 crore to Rs 2,000 crore, The Tribune report said.

“Issue of Offsets is actually irrelevant since this was not working in any case. As I have been saying all along, Offsets even for projects in excess if 2000 crores will be of no use from a defense technology point of view,” said G Raj Narayan, Founder & Md of Radel Group.

India is currently the largest buyer of military equipment and weaponary, which accounts for 15% of all international imports, Stockholm International Peace Research Institute, a Sweden-based think tank said.

The original article appeared on IBTimes.

Skill set development for the A&D sector – An MSME perspective

This Plenary session on January 7, 2016, at the Indian Science Congress being held in Mysore, aims to focus on the Make In India initiative with particular reference to the Defence and Aerospace sector.

The ‘Make in India’ is a paradigm shift from the past two decades of Indian obsession with IT and ITeS services during which manufacturing industries were allowed to collapse. There appears to be a new found realization of the benefits of manufacturing A&D products in India for home consumption rather than import them. However, ‘Make in India’ goes beyond just manufacturing, to design, innovate, manufacture and support in India. Viewed holistically, this has profound implications across a wide section of businesses. It involves huge numbers of creative engineers, technicians, professors, research scholars, sales, marketing and support staff, etc. all of whom need to possess specialized skills.

MSMEs in India contribute more than 45% of the industrial output of the country and hence constitute a large section of the manufacturing chains of almost all products. ‘Make in India’ opens up far more opportunities of raising their value proposition than being mere vendors to the large DPSUs. MSMEs will now have to scale up their capabilities to design and manufacture parts, sub-assemblies as well as complete products. This requires a wide variety of skills.

Considering that less than 10% of the engineers churned out of Indian colleges are found to be employable in the core engineering industries, imparting practical skills is the need of the hour for MII to succeed. Institutions such as the Drona School of Engineering Practice, which orients engineers to practical hands-on exposure to high value engineering skills in an industrial environment, are the way forward.

RadelMain

Radel Readying To Tie-Up with Foreign Defense, Aerospace Firms By March 2016

It was literally in disgust that G. Raj Narayan, founder and managing director of Radel Group, quit his job as an avionics engineer in the public sector to become an entrepreneur in electronics. That was way back in 1979. Three-and-a-half decades later, in 2015, Raj Narayan’s company is now a very important supplier of test jigs and aerospace parts to Bengaluru-headquartered Hindustan Aeronautics Limited (HAL) that he had left after 10 years of work to pursue his passion.

Today, his Radel Group makes key parts and sub-systems for Indian armed forces’ Russian-origin Su-30 and MiG-29 combat planes, AN-32 cargo planes and the indigenous Dhruv advanced light helicopters. After 36 years as an electronics company and 10 years after venturing into aerospace and defense sectors, Radel is now preparing to tie-up with foreign Original Equipment Manufacturers (OEMs) by the end of this financial year in March 2016 to take its business to the global market.

“Radel is not associated at the moment with any foreign OEMs, but is keenly looking for a partnership with a few. It is hopeful of closing a couple of deals during the current financial year,” Raj Narayan told Arming India in a recent interview. He, however, refused to name the foreign companies that Radel Group is talking to for a tie-up.

Radel group consists of two independent companies. Radel Electronics is the older organization and has been in the consumer electronics products that are designed, manufactured and sold by it. Radel Advanced Technology, established in 2005, focuses on the micro, small and medium enterprises opportunities in the aerospace and defense sectors. Radel Advanced Technology is approved by India’s military certification agency, CEMILAC, as a design organization and has executed over 20 projects for HAL, the Indian Air Force and the Indian Navy, completely designed and manufactured in-house. These include airborne as well as ground test equipment.

“A strong background in aerospace and avionics is what led to an entrepreneurial stride that combined my professional capabilities as a classical musician and an avionics engineer. The return to the Aerospace and Defense sector was made possible in 2005 when the government opened up these sectors to private sector participation.

“Since electronics lies at the core of almost every system on any military platform, and almost all of them are currently procured from abroad, there is more prospect in this area than a few creative and innovative MSMEs can actually handle. The business potential runs beyond a few thousand crores, though this needs to be tackled in a holistic and planned manner by the government and the armed services. This is where a Vision Group is crucial to creating a long-term plan of action that can ensure a win-win situation for all stakeholders,” Raj Narayan said.

Targeting 60% Growth over the Next 3 Years

Radel Advanced Technology is now aiming to ramp up its operations into the global Aerospace and Defense sector, targeting an annual growth rate of over 60 per cent for the next three years.

“The aerospace and defense industry is characterized by long gestation periods. Radel has successfully crossed this crucial milestone and is now on a high growth path. This position is further reinforced with the emphasis being placed on ‘Make in India’ and ‘Defense Indigenization’ directives of the Indian government. With a strong and proven in-house design capability, the organization is very confident of meeting the growth targets as long as the government remains focused on encouraging indigenous talent and capabilities.

“Opportunities exist in all three armed services as well as Defense Public Sector Undertakings (DPSUs), but the latter need to look at Indian MSMEs as high value addition partners rather than just ‘sub-contractors’ of low value added services,” he said.

According to Raj Narayan, the Indian aerospace industry is predicted to be poised for a quantum growth over the next 10 years. “In the civil aviation sector alone, a total of around 1,300 aircraft are expected to be inducted, while in the military sector, around 400 aircraft are expected to be inducted. In addition, the current ageing fleet of the Air Force and Navy are expected to be either upgraded or fitted with indigenized equipment. All these activities are bound to result in a rapid growth of the Aerospace and Defense sector.”

Electronics content, Raj Narayan noted, constitute a significant proportion of the cost of any platform or equipment housed within a military platform. Defense electronics, being a much specialized domain with unique and stringent requirements, poses its own challenges while providing huge business opportunities.

“One of the major handicaps is the lack of a component manufacturing base, with the result that Indian equipment manufacturers have to import almost all the components. This, therefore, results in additional costs of Customs duties along with associated handling expenditure and delays. The second handicap results from the fact that the armed services themselves do not have complete technical details and knowledge of the equipment that they wish to indigenize and therefore the procurement process does not lead to a successful result,” he said.

“The solution to the above problems lies in a holistic approach to be adopted by the Defense Procurement Agencies that synergies the strengths of all stakeholders, namely, Armed Services, DPSU (who possess some of the domain expertise), large private players, who have the financial clout to invest in Research and Development, and the MSMEs, who provide the best value for money with their lean organization and innovative minds.”

Economic Reforms Can Help Overcome Sector’s Multiple Challenges

The aerospace and defense sector, he said, faced multiple challenges. “First and foremost, the Indian government needs to facilitate the creation of a healthy ecosystem for the growth of this industry through the provision of incentives as well as improvement of infrastructure. Secondly, skilled technicians and engineers are not available for this specialized sector. While engineering colleges across the country churn out graduates in thousands every year, few possess any practical exposure or experience to make them industry-ready. Hence, both the central and state governments should act as facilitators for establishment of Skill Training schools within public and private industries already operating in the sector.

“Thirdly, labour reforms that constitute a major stumbling block for sustained growth of any manufacturing organization in India, need to be implemented urgently. Fourthly, the productivity and efficiency of the government departments that are involved in import and export of goods and raw material, should be improved far above the pathetic levels existing at present. Free movement of goods from one state to another within the country, through simplified VAT (GST) is also urgently required.”

Raj Narayan felt that the present Defense Procurement Procedures (DPP) failed to recognize and encourage private sector players, especially MSMEs with proven track record and talent. “There is no weightage for quality and competence of a vendor. Therefore, the process mostly fails to enable the armed services to move towards self-reliance that they have been fondly wishing for over six decades. While the DPP has some clarifications on the process of indigenization, many of the procurement agencies are unaware of the same and hence the process is poorly implemented leading to failures and shortages.”

Within the company, the acute shortage of skilled talent in the sector was overcome by a well laid out training program for new as well as existing manpower. The trainees are exposed to the critical and stringent needs of the aerospace and defense sector through live experiences on projects, Raj Narayan, who also is the chief mentor of a training school called Drona, said.

Make-in-India Should Go Beyond Rhetoric

The Radel Group chief noted that the ‘Make in India’ remained at most a “rhetoric” than any concrete progress on the ground. “However, the slogan by itself has energized not only industries, but also DPSUs and the defense procurement agencies. A distinct push for sourcing defense equipment from Indian sources is clearly evident. However, it remains to be seen how far this will result in actual growth in the manufacture of indigenous defense equipment,” he said.

“Make-in-India needs to go far beyond just manufacturing under license from a foreign OEM. Indian companies need to be incentivized and encouraged to design and develop our own products using our own technologies and this capability will then lead to self-reliance through continuous up-gradation of technology that is also developed indigenously.”

Raj Narayan was on the opinion that no foreign company would ever part with any technology or products or processes, especially relating to military and aerospace industry. “The only route to self-reliance is through hard work and indigenous R&D. From this point of view, modification or changes to the Offsets Rules and Guidelines will only have short-term gains, if any, in terms of creating low value, low technology work being outsourced by the foreign companies.”

While this could be significant for MSMEs with no design and development capabilities or domain expertise, MSMEs with proven track record and competence need to be nurtured and supported by the government as well as the armed services, financially as well as morally, he said.

“Even a small part of the R&D funds provided to Defense Research and Development Organization could yield relatively higher returns and long term gains to the stakeholders. Notwithstanding the above, it is heartening to see that many hurdles to the implementation and expansion of the Offsets program have recently been removed. It now remains to be seen how well the foreign companies respond to the amendments and actually execute their Offsets liabilities. This would be a test of their sincerity.”

The original article appeared on ArmingIndia.