Tag Archives: Indian Aviation SME

Is ease of doing business only for foreign investors?

There is an urgent need to cut unnecessary costs that hinder Indian businesses. PM Narendra Modi has been travelling far and wide to invite foreign companies to invest and ‘Make in India’ with an assurance that doing business in India is going to be made far easier than it has been so far. From a foreign investor’s point of view, it is not the number of places that India goes up the bottom of the ladder that matters, but the actual position towards the top of that ladder that the Indian government intends to reach. But the more important question in every Indian businessman’s mind is whether this so-called ‘ease’ is only meant for foreign investors with Indian businesses continuing to suffer all the woes.

‘Make in India’, ‘Defence Indigenisation’, ‘Self-reliance’ and ‘Digital India’ are great slogans for creating the hype, and also causes the hungry Indian businesses to salivate. If our PM is serious about enabling and empowering Indian businesses to play in the competitive global market place, everything boils down to competitive costs, whether for local consumption or exports. Let us look at what these costs include. The adage ‘Time is money’ is certainly not understood either in our bureaucracy or government decision-making, and least of all, our honourable judiciary. ‘Delivery time is the essence of the contract’, says a purchase order of a DPSU that takes eight months to process tender bids for a relatively low value item.

‘Ease’ of Funding: ‘Funds, funds, funds’ is the cry of the most MSMEs across the country. Various glorified schemes exist on paper, but rarely made available even to the most successful of entrepreneurs with orders worth crores on hand. An MSME entrepreneur is expected to kneel and beg, and work through the maze of red-tape, only to get a few crumbs thrown to him while companies providing ‘good times in the sky’ get crores even if they are bound to result in NPAs. Private funds are available for budding startups — preferably in the online space— but for the manufacturing industry this comes at a significant cost.

‘Ease’ of Regulations: Tax authorities are accorded enormous powers that are often abused. The sales tax department goes around attaching banks accounts of assesses on flimsy grounds so that it can show inflated revenue collections even if these are bound to be refunded a few years later after judicial intervention. The businesses meanwhile, suffer a huge cost that is never reimbursed, not even the interest on the amount unfairly seized by the government.

Many MSMEs have faced this situation, and have had to take one of these three hard decisions, all of which involve significant financial costs: (a) bribe their way out of it (most MSMEs opt for this solution), (b) go through the lengthy judicial process (very few MSMEs have the courage and patience to go through this) or – for several entrepreneurs, the worst but only option—(c) take the financial hit and shut down. Why should assessment officers be empowered to execute summary assessments overruling evidence in spite of an assessee filing all the required documents? If there is no cost attached to such malpractices of the bureaucracy it makes merry at the cost of the entrepreneur.

Income tax and Central Excise departments are no different. Refunds are rarely made within three or four years leading to loss of interest which is a cost to the entrepreneur. The Legal Metrology Department too has joined the party, confiscating electronic white goods ridiculously classifying them as ‘packaged, commodities’ that require registration with the department.

‘Ease’ of Labour: What about costs imposed by outdated labour laws? Anything and everything can be contested in a labour court, even if an employer has abided by the laws. This leads to litigation costs as well as unproductive wages being incurred in one form or the other, besides fees to consultants and advocates. If labour reforms are only going to target garage operations with less than 40 workmen, does it mean that larger MSMEs will continue to face the woes of running a manufacturing establishment?

‘Ease’ of Infrastructure: Certainly not the least important, infrastructure costs add significant amounts. Shortage of electricity has been a perennial problem in Karnataka for decades, and businesses are forced to operate on DGs which imposes multiple costs if an employee needs to spend three hours travelling to work in a messy city such as Bengaluru, that is a cost due to unproductive time. By the time the much hyped ‘Namma Metro’ achieves full connectivity, it would itself be as congested as the Mumbai trains, which would be self-defeating.

Cost of urban land, provided to foreign investors at a fraction of what is charged to Indian MSMEs, makes the whole business proposition unviable. If any subsidised rates are offered, it comes with ‘hidden’ costs. The lion of ‘Make in India’ will continue to sleep, or subsist with low value addition ‘manufacturing’ using CKD kits of MNCs as long as we fail to look for holistic and long-term solutions involving both the State and Central Governments.

The original article appeared on Deccan Herald.

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.

Bengaluru Company develops technology for IAF

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Bengaluru-based aero defence equipment maker Radel Advanced Technology (RATPL) is eyeing huge opportunities in the defence sector this year and is developing a series of Indigenous technologies for the Indian Air Force (IAF).

“An Electronic Line Replaceable Unit (LRU) for the Dornier (maritime reconnaissance) aircraft is under development and has successfully undergone functional testing at Hindustan Aeronautics Ltd (HAL). It is now in the qualification testing phase”, the company’s managing director, G. Raj Narayan, told IANS.

Also, the company is awaiting integration and flight trial reports from the IAF for an electronic bomb-release controller used on fighter aircraft. “Once this is completed, the unit will enter serial production,” Narayan said.

RATPL has increased the life span of the Jaguar fighter aircraft by indigenizing the distributor used on its rocket pod. The IndianSME has used modern electronic systems to replace the original, which is now obsolete.

“This unit has undergone successful certification following into serial production,” Narayan said.

The company is also working on the repair of a high voltage power supply component of the Indian Navy’s helicopters.

“The project involves reverse engineering and design of a new power supply module using current electronics technology. The project is nearing completion and the finalized unit will be delivered to the Navy in a couple of weeks,” Narayan said.

The company is certified by CEMILAC (Centre for Military Airworthiness Certification) and has executed 20 Indigenization projects for HAL and the IAF.

It has already designed, developed and supplied a number of ground rigs for testing the avionics on board the indigenous advanced light helicopter (ALH) and the Sukhoi Su-30MKI combat jet. Multiple numbers of these have been supplied to HAL and are operating across IAF bases.

“Repeat orders for these are being periodically executed by us to meet the needs of HAL, “Narayan said.

The original article appeared on Business Standard.

Your Stamp in the Sky

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Extract from an article that was published in the New Indian Express:

The Narendra Modi government recently allowed private players based in India to manufacture equipment for the Indian Air Force. In July this year, the Defence Ministry approved the construction of 56 transport aircraft by private players. This is the first time that the private sector will design and manufacture aircraft and will not be supported by the government enterprise, Hindustan Aeronautics Limited.

There has been some shift since the new government is encouraging participation of the private sector. It was not a dynamic environment before, but now we can expect some change and emergence of indigenous technology in the industries.

This has ignited interest in courses on aerospace.

Demand for the course

In India, you can do a course in Aerospace/Aeronautical Engineering. BE/ME, BTech/MTech and PhD-level courses are available in the country. Aerospace engineers are required to have both theoretical and practical knowledge. So, most of these programmes will focus on maintenance systems, production planning and control, airframe instruments and industrial management.

“Studying the subject is very interesting as it has practical applications and is challenging compared to computer science or electronics engineering,” says Lynden Martin Gomez, an aeronautical engineering student who graduated last year from KCG College of Technology, Chennai.

Tweet this: “Students get attracted by IT companies and take up jobs there while the passionate few go into core engineering industries”

Career scope

Aerospace engineers are paid from Rs.15,000 to Rs.50,000 a month depending on the firm and their experience. You can become a general manager, aircraft design engineer or a technician. Some companies where you can seek jobs include Indian Space Research Organisation, Defence Research and Development Organisation, Hindustan Aeronautics and National Aeronautics Labs. While there are many job roles and companies that take in such engineers, “it was hard finding a job immediately after graduation,” says Lynden.

“Very few who come to us have hands-on capabilities. They seem to have pre-conceived ideas that seem dull. Students should be encouraged to innovate and design new equipment.”

The original article appeared in the NewIndianExpress