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India seeks global investment in aerospace

Vice-President Mohammad Hamid Ansari visits the hangar of Hindustan Aeronautics Limited in Bengaluru on Jan 7, 2015.

Vice-President Mohammad Hamid Ansari visits the hangar of Hindustan Aeronautics Limited in Bengaluru on Jan 7, 2015.
Vice-President Mohammad Hamid Ansari visits the hangar of Hindustan Aeronautics Limited in Bengaluru on Jan 7, 2015.

By Fakir Balaji 

Taking up the Narendra Modi government’s ‘Make in India’ campaign avidly, the defence ministry is pulling all stops to ensure global firms invest in the fledgling aerospace industry so it can reduce imports and achieve self-reliance.

“In line with the government’s policy to promote greater indigenisation in the defence sector, the thrust of the air show this time is on making requirements for our services within the country and reduce imports overtime,” a senior official said.

With ‘Make in India’ as the theme of the 10th edition of Aero India, the biennial expo will beckon global firms to become partners in developing the aerospace industry than being sellers only for the world’s third largest armed forces.

“As 60 percent of our defence requirements are met by imports, the objective is to reverse the trend and become self-sufficient in manufacturing military equipment and become an exporter,” defence exhibition organisation director M.D. Singh said ahead of the five-day mega event from Wednesday here.

The defence budget for this fiscal 2014-15 was increased 12.43 percent to Rs.229,000 crore ($38.15 billion), with 40 percent of it being spent on capital acquisitions.

In comparison, China allocated $132 billion and Pakistan $7 billion for their annual defence expenditure in this fiscal.

According to union Finance Minister Arun Jaitley, who held the defence portfolio for the first five months of the NDA government, India is the largest buyer of defence equipment in the world as domestic manufacturing is still at a nascent stage.

To encourage global firms manufacture in India through joint ventures with Indian partners, the new government increased the foreign direct investment (FDI) in defence production to 49 percent from 26 percent this fiscal.

FDI above 49 percent will be allowed on case-to-case basis on approval by the cabinet committee on security, with access to technology.

“Opening the strategic defence sector to the private industry will not only help foreign manufacturers to partner with Indian firms, but also help build domestic capabilities for meeting the requirements of our services and facilitate exports in the long-term,” Singh noted.

The defence offset policy also has the potential to attract Rs.25,000-crore (Rs.250 billion) for global and Indian firms over the next eight years.

“The new policy promotes self-reliance, indigenisation, technology upgradation and achieve economy of scale for exports in the defence sector,” Singh said.

India is in the process of finalising a $20-billion contract for 126 Rafale medium multi-role combat aircraft from the French aerospace major Dassault Aviation.

Negotiations are also underway for procuring M777 155mm howitzers, Apache attack helicopters, Chinook heavy-lift helicopters, VVIP helicopters, mid-air refuellers and additional P8I maritime reconnaissance aircraft, among others.

To convince global manufacturers and suppliers that he means business and woo them to invest in India than seek orders, Prime Minister Modi is flying here early Wednesday to flag off the air show along with Defence Minister Manohar Parrikar and top officials.

Of the 110 countries participating, the US is representing in a big way with a 64-member delegation, followed by France with 58 delegates, Britain 48, Russia 41 and Israel 25.

About 300 chief executives (CEOs) from global aerospace majors will hold business meetings with their Indian counterparts to explore joint ventures, co-development and outsourcing sub-systems, accessories and components.

About 750 overseas and Indian firms, including state-run enterprises will showcase their technologies and products at the expo in dozen pavilions spread over 2.5 lakh square metres at the venue.

Business-to-business (B2B) and roundtable meetings of Indian firms with those of Israel, Britain and Poland will be held at the event.

Heads and representatives from the Indian armed forces and paramilitary forces besides service chiefs from nine countries are among those attending the event.

A record number of small and medium enterprises (SMEs) are also participating in the event to help in pushing the ‘Make in India’ campaign.