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MSMEs should scale up their capabilities

Micro, Small and Medium Enterprises will have to scale up their capabilities to design and manufacture parts, sub-assemblies as well as complete products which requires a wide variety of skills, said G Raj Narayan, founder and MD Radel Group and Chief Mentor of Drona.

Speaking at a Plenary Session at the 103rd Indian Science Congress on Aims to focus on the Make In India initiative with particular reference to the Defence and Aerospace sector’, he said that MSMEs in India contribute more than 45 per cent of the industrial output and hence constitute a large section of the manufacturing chains of almost all products. He said that ‘Make in India’ opens up far more opportunities of raising their value proposition than being mere vendors to the large DPSUs.

Considering that less than 10 per cent 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.
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 domestic 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, he added.

The original article appeared on UniIndia.

This is the level of our engineering graduates

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How imperative is it to skill our engineers? When does skilling really start? At the post-graduate level? Graduate? School?

Let me narrate a recent incident to you, and then you can draw your own conclusions.

This is how an engineering graduate with a further six months training in embedded systems, attempted to solve a simple exercise that I had given her:

The task was to calculate digital samples for generating a sinewave. I casually suggested that she could use Excel, if she wanted. She looked quite puzzled and asked ‘How can Excel calculate the samples’? I said, ‘Can’t you give a formula’? She asked, ‘What formula?’ I said, ‘If you specify ‘x’, the computer can calculate ‘sin x’. Anyway, I said she could do it manually with a calculator also if she so wished.

She came back to me with a table written on her notebook with columns of ‘x in 1 degree increments’, ‘x in radians’, ‘sin x in decimal’, ‘Hex value in 8 bits’. She had stopped at 15 degrees since it was taking her too much time to manually calculate the entire 360 degrees. I also noticed that she had not taken the negative values of sin x. So, I asked her to calculate just one sample in the 2nd and 3rd quadrant.
She shot back, ‘Quadrant’?
I said ‘yes. Do you know what is a quadrant’?
She shook her head and sheepishly said, ‘I’ve forgotten. You mean 270 degrees?’
I asked ‘What is the first quadrant’?
‘Zero’
Without revealing any anger in my voice, I asked, ‘What is the range of the first quadrant’?
‘Zero. No, 90’
‘What is the second quadrant’?
‘180’
‘What is the third quadrant’?
‘270’
At that point I lost my patience and told her, ‘First quadrant is from 0 to 90. Can you now identify the 3rd quadrant’?
‘Yes sir. It is 180 to 270’.
Quite relieved at this huge success, I said, ‘Can you now just calculate 16 samples of a full wave and show me the result’?
She came back after 15 minutes and showed me a set of calculations that were all wrong. She had no idea what she had to do.
I thought I would go to the absolute basics and asked her ‘What is sin 30’?
She quickly whipped out her scientific calculator. I said, ‘You don’t need a calculator for that. Can you not draw a triangle and calculate’?
She stared at me as if I was out of my mind. Then she drew a vague triangle in which not even one angle was a right angle.
So, I drew one and denoted x as the ‘opposite’ and y as the hypotenuse. I said ‘Can you now calculate sin 30’?
‘But both x and y are unknown’.
I helped her by saying that ‘y’, the hypotenuse was 1. ‘Can you now calculate x’?
She quickly and triumphantly wrote ‘x= y*sin 30’!
‘I think you can calculate the value of x in relation to y, can’t you’?
An empty stare.
‘If one angle is 30 in a right-angled triangle, what would be the other?’ I asked.
’30 degrees’!
‘What is the sum of all three angles in a triangle’?
‘180. So, the other angle should be 60’.
So, I drew a mirrored triangle beneath the existing one to create the resultant equilateral triangle and asked ‘Does this shape give you any hints?’
An empty stare. So, I asked ‘Do you see any symmetry in the super triangle’?
‘Yes! If one is x, the other is (1-x)’!
I slapped my forehead and said ‘If there’s an isosceles triangle, can you guess x’?
‘It is x/2’.
With many more minutes of prodding and slapping my forehead, she arrived at ‘sin 30 = 0.5’
‘Now that you’ve managed to calculate sin 30, can you now calculate sin 45′?
She drew another triangle just like the 30 degree triangle, wrote x=0.5 and y=1 and marked the angle as ’45’.
I remarked ‘How did you mark x as 0.5′?
‘Sir, we just worked it out’!
I let it be and asked, ‘If one angle is 45 in a right angled triangle, what is the other angle’?
I was quite relieved that she did not go for her calculator. She actually blurted out ’45’ in just under 35 secs.
‘Great! If two angles are 45, can you figure out any relationship between any two sides’?
‘The base (adjacent) will be root 2’.
I said ‘If the two angles are 45, which two sides would be equal’?
Losing patience, I identified the base and the opposite sides as ‘1’. ‘Can you now calculate the hypotenuse’?
A blank stare forced me to draw dotted squares on the three sides and I asked ‘Does this picture now tell you anything’?
She shook her head. I asked ‘Have you heard of Pythagoras theorem’?
‘I have forgotten, Sir’.
Assuming that x, y & z may be more confusing than the a,b & c that we used to be taught in school, I wrote the latter.
No use.
So, I just wrote the formula c² = a² + b².
Voila! ‘Root 2’ came the answer at last!!!!

‘Now that you have managed to calculate sin 30 and sin 45, can you now do sin 60’?
‘Sure’ was the very confident and proud reply.
She proceeded to draw yet another triangle that looked exactly like the first one and promptly wrote 60 in place of the 30.
She wrote ‘1’ on the hypotenuse and ‘1.5’ on the side opposite 60.
I was horrified.
‘How did you get 1.5 on that side’?
‘For a 15 degree increase from 30 to 45, that side increased from 0.5 to 1. So, for another 15 degree increase, it will increase by another 0.5’!
I thought to myself, “Absolutely brilliant logic”, but preferred to tell her calmly, ‘That’s not correct logic. If that was so, what would happen if the angle increased to 90’?

She proceeded to write two superimposed vertical lines for some distance and said, ‘It will be 2’.
‘How did you get 2? Why not 2.5’?
‘No, it can’t be 2.5’
‘But, you know what sin 90 is in reality, don’t you’?
‘Yes. 1’.
‘So, isn’t your logic wrong’?
‘Yes, Sir’.
‘So, now go back to your first triangle that you drew for sin 30. There’s something that you can see right there for 60’, I said.
She didn’t get it. So, I pointed out the 60 degree angle at the top of the triangle and asked ‘Can you write the sin 60 with reference to this angle’?
‘But that angle is in reverse. It goes beyond 180′.
I could not believe that I was listening to all this coming from an engineering graduate. Maintaining my composure, I took a deep breath.
I quickly drew another triangle as a mirror image of the 30 degree example and asked ‘Does this make any difference to the sin 30 just because the triangle is reversed’?
I was relieved when she said ‘No’.
‘So, can you now calculate sin 60 in the same triangle as the sin 30’?
‘Yes. It is 0.75’.
With anger and pain very visible on my face, I asked ‘How did you get that? Did you apply Pythagoras theorem’?
‘Oh yes. I forgot to do the squaring and rooting, Sir’!

If an engineering graduate has not understood the basics of what she studied in school, how did she not only progress through college but also get marks of over 60 and 70%? So, what’s the use of the examination system, not to talk of the class room lectures? If she does not even know the basic school-level geometry of a right angled triangle, let alone remember the name ‘Pythagoras theorem’, what science is she going to apply in life? What’s even more shocking to me is that many people tell me that 75% of the graduates are of this standard.

The question remains – If our engineering graduates do not learn how to apply basic mathematical, engineering and science concepts to solve a problem, what do we mean by “Make in India”?

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

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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.

Creating a generation of Design Engineers for Make In India

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Core engineering skill is what every employer in an engineering industry looks for, in a fresh engineering graduate. Most freshers applying for jobs in this sector however, falter at the very first step – the screening test. Many cannot answer even the simplest high-school level question in physics or mathematics. Those that clear this small hurdle, fall at the next – the interview. Again, simple questions stump them. Yet, when questioned about the details, they are not able to explain anything.

Finally most of them admit that the project work was just bought out from small institutions or individuals who make a business out of it. The candidate who is finally hired by the company needs extensive training for 3 to 6 months, before any useful work is produced. Till then, there is zero output from the new employee. This story is true for many engineering industries. This is the kind of talent gap that they face.

As is well-known, the root cause for this is the over-emphasis of our education system, even at the undergraduate level, on rote-learning and theory, at the expense of practical application. Ultimately, this is counterproductive, because an engineer is basically one who has to apply theoretical principles in practice.

Tweet this:“While skilling the technician is important, creating a new generation of product designers is imperative”.

So, what is the solution? The student is helpless, as he is a prisoner of the system. So too are the teachers. It is not easy to overhaul the engineering education system, but solutions have to be found, to unlock the potential of these ‘rough diamonds’ – our engineering graduates, so that our goal of self-reliance in manufacturing through ‘Make in India’ can be achieved.

‘Make in India’ is about manufacturing our own products with IPRs owned by Indian companies. It is not about just manufacturing foreign products ‘under license’. Not long ago, we had Indian companies manufacturing ‘Indian TVs’ with component kits imported from abroad. But now, you have Korean and Japanese brands selling their TVs in India, but almost completely manufactured in China. Hence, the need of the hour is for Indian companies to learn to design and manufacture our own products.

So, how do we create a generation of design engineers that can produce innovative new products? Engineering students need to learn the practical application of each theoretical concept, and need inputs on multiple aspects related to the design and manufacture of even the simplest equipment. The very process of thinking, conceptualization, and designing elegant, reliable, rugged and power efficient products, whether in embedded software or electronic hardware, how to ‘marry’ the two, and adopting a well-documented design process, making sure that every aspect of the product life cycle is covered.

While these concepts can be explained at brief workshops, it is only through actual hands-on work on a live project that a student or fresh engineer can learn and understand the practical implications of each of them.

While skilling the technician is important, creating a new generation of product designers is imperative. Only this can ensure a sustainable and meaningful ‘Make in India’. Radel’s new venture ‘Drona School of Engineering practice’ does precisely this.

Make In India – But who will skill our Engineering Graduates?

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The USD 400 billion opportunity

The catch-phrase today in Indian Industry is ‘Make in India’. The estimated domestic demand for Electronics products alone, is of the order of USD 400 billion by 2020. Every entrepreneur in the manufacturing sector is aspiring to take a slice of this pie.

The Challenges

However, if Make in India is to become a reality, there has to be a focus on the product manufacturing sector. China today, is a giant economic power, because it is a manufacturing hub for almost everything across the globe. Unless we are self-sufficient in Manufacturing, we can never hope to match, leave alone overtake, our neighbour.To achieve this, as has been highlighted by many experts, several areas need urgent attention – such as our infrastructure, labour laws and tax laws. But by far the most important initiative needed is in making our engineers employable. This is the greatest hurdle in the realisation of the goal of ‘Make in India’. Without competent engineers to drive the programme, how can the campaign even take off? How will we create our own products?

One step further – from Make in India to Design in India

In the Aerospace and Defence sector, how will India transform from being one of the largest importers of defence equipment, into being self-sufficient in defence products and then onwards to become an exporter? We need to make our engineering graduates skilled not only in Manufacturing but in Design.

Tweet this: We need to not just Make in India, but Create in India, Design in India and Innovate in India, so as to create and own all the intellectual property ourselves.

For this, we need to skill our engineers not just as computer operators but as intelligent designers and engineers in practice.

Why do we need to skill engineers?

There has been a lot of emphasis of late, on ‘Skilling India’. Most of the initiatives under this program are focused on skilling the workforce at the technician level – electrician, machine operator, etc. There is no recognition of the crying need for our fresh engineering graduates to be made job-ready with hard-core engineering domain skills. Reports suggest that out of about 1.5 million engineers graduating from more than 3500 engineering colleges across India in 2014, only a shocking 4 to 7 % of engineers are actually fit for jobs in the core engineering sectors.

Tweet this: Studies also indicate that employers are not satisfied with the fresh graduates they recruit, and that ‘Graduates seem to lack higher-order thinking skills (analyzing, evaluating and creating)’.

There is a huge demand from the core engineering industries for practical engineers who have hands-on experience. We need to close this large gap between the existing education system and the actual industry requirement.

Today, while we find many training institutes for software, even computer hardware (assembly & troubleshooting) and networking, there are very few training schools for engineers in core engineering disciplines, especially Electronics and Aerospace Engineering Design, and none that include robust processes, documentation and project management. Industries spend several months training them on these essential skills.

In view of the need faced by Engineering students and the Indian Manufacturing Industry, Radel (a well-known name in the Aerospace and Consumer Electronics sectors) has embarked on a novel initiative – Drona, school for engineering practice, that mentors and trains graduates and fresh industry recruits in a real industrial environment with exposure to exciting live projects, to make them industry-ready.

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

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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.

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

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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

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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.

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

Role of Government to facilitate the active participation of SMEs

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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.

Making in India, for aerospace and defence

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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.

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