Tag Archives: Indian SME

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

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.

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.

Indian SMEs set to battle it out for Rs 18,000 crore defence pie

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A $3 Billion opportunity for Indian SMEs and Defence MSMEs has been created by Defence Procurement Policy 2013 and the Make In India Campaign. Numerous offsets in the three wings of the armed forces are expected to be executed in the next five years.

According to defence MSMEs, the two key initiatives have opened up an estimated Rs. 90,000 crore business opportunity, identified as the offset opportunity for defence players in public sector undertakings (DPSUs) and also for the MSME sector over the coming five-year period. It is reported that prospective business worth Rs.72,000 crores has emerged from IAF (Indian Air Force), with the Indian Navy presenting another Rs.13,500 crore possibility. The prospect from the Indian Army would be around Rs.4500 crore. In the last few years the total value of defence offsets contracted in the last few years is valued around Rs.28,800 crore. The Indian Air Force has signed contracts worth approximately Rs.21,600 crore, the Indian Navy worth Rs.5,064 crore and the Indian Army Rs.144 crore.The MSME sector could expect business worth of Rs.18,000 crores, which would be 20 percent of the Defence sector’s overall projection.

The most promsing area that should encourage SMEs in the defence segment is the indigenous manufacture of parts and
sub-assemblies to replace obsolete original equipment (the MRO sector). It includes the design, development and manufacture of complete equipment as a replacements. Serious efforts have to be made to attract SMEs into this obsolescence management sector. In turn, SMEs should rise to this occasion by raising their standards of quality and reliability of parts and assemblies that are manufactured by them, as supplies to larger players. Large organisations can then outsource in parallel to multiple efficiently managed MSME organizations.

This kind of involvement will certainly reduce the cost and the time of execution of projects, which are chronically plagued by delays today.

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

Why doesn’t India have really good, indigenously built fighter jets ?

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A modern fighter aircraft is a very complex machine. It consists of a high performance aerodynamic airframe, constructed using a variety of modern materials such as aluminium and titanium alloys, carbon/glass fiber composites, etc., and a very high performance jet engine involving cutting edge technology and high precision machined parts. This only constitutes the basic flying platform, which is then equipped with a large variety of systems involving hydraulics, pneumatic, avionics, electrical and weapons related equipment to make it an efficient, sturdy, rugged, reliable, dependable, potent and safe machine. In fact,

“The quality of the systems and weapons fitted on a fighter aircraft is what really determines whether it is a “really good” or a mediocre aircraft”.

An equipment indigenised by Radel that fires rockets from Jaguar aircraft

The design and development of a modern fighter aircraft needs a whole set of skills, capabilities, technologies and infrastructure extending over a very wide engineering spectrum. Further, due to the rapid advances in engineering technologies these days, such an industry would need to assimilate technologies as well as innovate their own continuously through R&D.

All these require highly qualified and trained engineers and scientists, who are encouraged and supported with the best of environment, infrastructure, financial backing and most importantly, quality leadership. Such an ecosystem has been sadly missing in this country all these years. With HAL being the exclusive PSU engaged in the development and manufacture of military aircraft for the last six decades, there has been very little opportunity for the private sector to get a foothold in this sector. One must also appreciate the fact that an aerospace industry is highly capital intensive with long gestation periods and hence no private sector organisation would have been able to afford the investments as made by the Govt. of India into HAL.

It is only in the last 15 years that large Indian business houses have evinced interest in foraying into aircraft manufacture. The synergy arising out of the joint participation of various aerospace organisations such as NAL, ADE, DRDO and HAL, by itself has resulted in a quantum jump resulting in the development of the LCA. This needs to be carried further with the active inclusion of the private sector, particularly in the areas of development of the airborne equipment falling under various categories.

What is required is a holistic and planned approach to developing the indigenous capability that synergises the strengths of the Govt. controlled aerospace organisations with the private sector companies that possess proven domain expertise in each of the engineering areas such as electronics, electrical, hydraulics, mechanical, pneumatic, and software engineering.