Thursday, June 06, 2019

Looking at growth for the aerospace industry in India

India has caught the attention of major aerospace defence manufacturers with its low production cost and government’s strong focus on building manufacturing sector under Make in India initiative. The Government of India (GoI) has been steadily creating an enabling ecosystem of policies and regulations to give the much-needed fillip to the Indian Defence Industrial Base (DIB). Over the last few years this has led to significant interest in this sector from domestic and foreign companies alike – which is primarily driven by defence equipment demand in India.

Mirroring the complex industry structure, the procurement process too is mired with intricacies, which often leads to the sellers (and investors, in effect) facing significant uncertainty stemming from bureaucratic red tape, budgetary issues and other similar concerns. Despite the uncertainties in the order booking timelines, the industries need to infuse large capital to build capability and capacity, well in advance. In addition to this, the high-technology industry calls for sustained funding requirements to manage technology upgrades and deal with obsolescence regularly.

Apart from such commercial issues, one needs to be equally cognisant of legal challenges such as information security, intellectual property protection, regulatory and transactional due diligence, etc. However, despite all the challenges, defence & aerospace remains a critical sector for India, often referred to as the ‘sunrise’ sector, given that India is aiming to shift from being the largest importing nation to being a self-reliant and exporting nation.
06/06/19 Manufacturing Today
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