Defence Industry

Aerospace: USD 41.99 billion deals are in process of getting signed
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Issue Net Edition | Date : 14 Feb , 2011

CII-KPMG at the back of the Aero India Show 2011 released a report titled ‘Unlocking the potential of the Indian Aerospace and Defence Industry”. The report was released by Minister of State for Defence Mr M. Pallam Raju in Bangalore. The study aims to provide a fair assessment of the opportunity triggers and critical success factors for making India a participant in the global Aerospace and Defence sphere.

KPMG research indicates that deals worth USD 24.66 billion (approximately) have been signed by the Indian Ministry of Defence (MoD) with global integrators in the past 48 months and another USD 41.99 billion (approximately) deals are in the process of getting signed. This is testimony to the fact that India today is one of the biggest markets for Aerospace and Defence.

On analyzing the global best practices in the Aerospace and Defence industry, a clear case can be established for some critical success factors required to develop and maintain a successful aerospace and defence sector in any country. On each of the critical success factors, from sustained government support, technical capability to enable manufacturing, supporting industry framework to a skilled human resource base, the nascent Indian Aerospace and defence industry has a foothold strong enough to potentially catapult into becoming a leading aerospace and defence hub.

According to Richard Rekhy, Head of Advisory at KPMG India, “The government is clear in its vision for this sector – indigenisation of the industry and acquiring advanced technologies which will in turn facilitate the lowering of dependence on imports. In this effect, the Defence Procurement Policy (DPP) 2011 is a widely accepted, well planned document, reflecting the government’s commitment to forging international partnerships through expansion of the offset policy. However, the market now looks forward to the effective operationalisation of this comprehensive document”.

On the technical manufacturing ability front which was traditionally developed by the DPSUs, private partnership needs to be encouraged as the country progresses on the aerospace and defence curve, be it in manufacturing, R&D services, IT/ITeS or quality standards. India has already proved its worth in providing the correct market dynamics for the growth of this industry in the form of a large and highly developed SME base as well as one of the fastest growing air transport MRO market in the world. However, issues of supply chain integration, technological inferiority and funding still need to be addressed.

The synergistic interplay of all stakeholders coupled with the immense potential and plethora of opportunities in the Indian aerospace and defence sector; could become trigger points in making India the most prominent aerospace and defence industry in the world.

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