Flagging Off

Indian Companies Are Competing Globally To Bag Orders For A&d Oems. And How.

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A MULTI-BILLION DOLLAR SECTOR, THE Indian aerospace and defence (A&D) sector is a focus market for many global A&D companies. The Indian market is also attractive for domestic components manufacturers aspiring to achieve non-linear growth via positions in the A&D value chain across platforms.

In 2001, the government opened this sector to private and foreign investment. Over the years, it has sought to build a domestic industrial base and has set itself a challenging target of achieving 70% indigenisation. To broad base the target, the government has made transparent global bidding guidelines in the Defence Procurement Procedure (DPP), which is revised annually.

To India's advantage, the country has emerged as a global R&D hub with 150 of the Fortune 500 setting up R&D labs in India. This is necessary because the aerospace sector demands perhaps the highest degree of fail-proof quality standards. This combined with unpredictable demand, lumpy orders and extreme pressure on pricing makes the risk of aerospace business significantly high. Aerospace manufacturing for the defence sector is even tougher given that there’s only one ultimate client per country – the Ministry of Defence (MoD); the orders are even more unpredictable and lumpy; and the negotiations, approvals and payments can be test one’s patience.

However, despite the challenges, the Ministry in recent times has ensured that the A&D sector gets its share of indigenisation. The Centre has reiterated its resolve that India will achieve a status of net security provider in the Indian Ocean region by aggressively focusing on higher level of indigenisation especially in the defence and aerospace sector. The ministry has taken key policy steps to position India as an emerging defence manufacturing hub and to be one amongst the five top producers of defence products and achieve export target of Rs 35,000 crore by 2025.