FLAGGING OFF - Indian companies are competing globally to bag orders for a&d oems
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