Business Opportunities in India with a focus on MRO and Defence Sector

1. Business Opportunities in India with a focus on MRO and Defence Sector

2. Defence Sector of India Current Profile of Equipment State of the Art 15 per cent Matured 35 per cent Obsolescent 50 per cent • The maintenance, modernisation and upgradation of this equipment are a pressing requirement • Acquisition of latest state-of- the-art equipment is necessary to enhance capability of Indian Armed Forces

3. Attractive Market • Defence Budget is USD 31.9 billion placing Indian in the top ten global destination • Growth rate of increase of budget in recent years has been 13.4% CAGR • 40% of the budget is on Capital Expenditure • 70% purchases are based on imports • Defence Public Sector units produce most of domestic production which has a large percentage of imported sub-systems • The Government of India wants to reverse trend and would set in place measures for attracting FDI

4. Government of India Planning for Defence Sector • Domestic manufacturing to be augmented with FDI and transfer of foreign technology • Increase present Sectoral FDI cap of 26 per cent and private sector participation permitted • FDI by global companies in defence sector could lead to collaboration with public sector units • Flow of FDI and new technology will strengthen the defence public sector units

5. Concerns regarding foreign control of Defence Production • Defence production critical for security needs would be in foreign ownership • The ownership of global defence production companies are in a state of constant flux • A viable domestic defence production is required to meet urgent requirements in time of war • Critical information and technology can be regulated by verification and clearance procedure and export control as in the case of USA • Strong surveillance system can take care of other security concerns as illegal sales etc

6. Government of India sponsored discussions on measures for foreign participation in Defence Sector • OEM’s are reluctant to licence proprietary technology because of cap leading to minority status • Increase in cap will lead to technology transfer with spin offs in civilian areas • Capital Intensive Defence industry requires strong FDI flows • Production of defence equipment will strengthen manufacturing base • FDI cap can be extended to 74 per cent as in case of telcom • Indian Chambers of Commerce have put in objections but Companies like BAE have stated their requirements to Government of India

7. The Procurement Procedure • Defence Procurement Procedure was formulated in 2002 • Objective: To ensure efficiency and transparency in Defence acquisitions • Roadmap for future- coordinate offsets, transfer of technology and stimulate Foreign Direct Investment • FDI cap is bound to increase • The public sector monopoly will be diluted in the coming years

8. The Action Plan of Government of India • Requirement of Aerospace sector for high-end technologies • Significant comments of Air Chief Marshall, PV Naik, Chief of Air Staff • A Defence Production Policy for a level playing field for the private industry • Indian private industry should move from fringes to mainstream • Private sector’s participation in defence industrial base required • There are divergent views on the FDI limit in the country • A case-to-case basis on FDI limit may be considered

9. Indian Air Force • Air Chief Marshal remarks are significant about the current state of Indian Air Force( IAF) • Air Defence is most critical area of concern, obsolence has to come down • Modernisation of IAF includes induction of new fighter aircrafts, helicopters and transport aircraft • By 2022 IAF will have 42 squadrons • MRO facilities needs are urgent and the IAF is looking for experienced MRO companies • MRO requirements will be required in large bases and also forward areas

10. Purchase of AWACS by Indian Air Force • Three AWACS have been purchased by the Indian Air Force • Two planes have been delivered and one more will be delivered by end of year • Purchase of two more AWACS has been cleared • Long term plan is to purchase a total of ten AWACS • There is a requirement by the Indian Air Force for an MRO system • Experience in appropriate technology is required or collaboration can be done • Indian partners like TATA Group or other large Engineering companies can be sourced

11. Procedural requirements for entry in Indian Air Force – MRO activity • The Air Headquarters in New Delhi has to be always contacted in the first instance • There is no requirement to approach the Indian Defence Ministry • The contact has to be made by the concerned company or the Trade Commission of Embassy • The company can nominate a local Indian as their representative but not on consultant status • It is a myth that power brokers are required or a system of internal contacts • The Indian Air Force has an intelligent team of officers with full integrity • The company which has the required technical and organisational background will find easy access

12. Procedural requirements at Air Headquarters • It is advisable to call the Air Headquarters and ask to be connected to the Directorate of Engineering • There are various departments and Directorate of Engineering D has been the dealing department • An officer of the rank of Wing Commander who is equivalent to Joint Director should be contacted • The officer will give the fax number and request for full details to be faxed • The hard copy with documents can be send by courier only stating department and with no officer name • A presentation will be invited at Air Headquarters and the officers will be headed by an Air Vice Marshal

13. Repair Base at Nagpur • On successful completion of this stage the company will be referred to the major repair base • This is the HQ Maintenance Command IAF and is located at Nagpur • A Group Captain will coordinate this crucial presentation • The presentation will be to the officers actually involved in MRO activities • The officers will be headed by an Air Officer Commanding-in-Chief • This Command will inform Air Headquarters and coordinate further activities • Care must be taken at all times for foreign nationals to take advance permission to enter facilities • It is useful to have an Indian national to coordinate activities

14. Indian MRO Organizations • Wings Aviation MRO (Wings Aviation Private Limited (WAPL), Hyderabad, India • Air Works India Engineering Pvt. Ltd   • HAMCO (Hydrabad Aircraft Maintenance Company) • Hindustan Aeronautics Ltd • Taneja Aerospace & Aviation Ltd (TAAL) • Shaurya Aeronautics Pvt. Ltd. (SAPL) • Vikram Aviation Pvt. Ltd. (VAPL) • Deccan Technical Services (DTS) • Cochin International Airport Ltd • A.R. AerotechPvt Ltd  • Air India MRO at Mumbai & Hyderabad

15. Indian MRO market – the growth potential • Poised to be a large commercial and defence aircraft market • Growth rate would be approximately 10%, USD 2.6 billion by 2020 • MRO manpower is approximately 60 per cent cheaper as compared to existing facilities • Large pool of technical manpower • Locational advantage – between Europe and Asia Pacific

16. Profile of possible Indian Partners in Aviation Sector • Transtec Overseas Pvt Ltd part of group (Est. 1923) ISO 9001:2000 • In the field of Mechanical power transmissions, Material handling systems, Ground Support Equipments • Assembly and Manufacturing facility in Gujarat • Technical Partners in England • They have a complete team of specialized engineers from hydraulics, pneumatic, electrical & electronics sector. Since India was previously an importing nation back in the early 70, they developed first Container Dollies for Air India in 1978 as started indigenous development of Ground Support Equipments Training initiatives • Cadet Pilot Training- Cabair Group www.cabair.com [Won contract to send students from Air India to their facility in Florida] • Aircraft Engineering Training- Kingston University- London [Currently in bid to establish National Institute for Aircraft Engineering Training] > www.kingston.ac.uk/engineering

17. A current opportunity - GMR

26. References • Delhi airport picture - http://www.acgil.com/airporttransfer/index.html • Mumbai airport picture - http://flashnewstoday.com/wp-content/uploads/2010/09/mumbai_airport.jpg • Discussion Paper: Ministry of Commerce and Industry: • http://dipp.nic.in/DiscussionPapers/DiscussionPapers_17May2010.pdf • MRO Perspective: • http://www.thehindubusinessline.com/2009/03/16/stories/2009031650411200.htm