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Indian aerospace market


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Description of Aerospace Market of India

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Indian aerospace market

  1. 1. India Market Entry Rechtsanwalt S. Boll 18. Oktober 2011 History in Brief Aerospace Clusters / Supply Chain / PSU / SEZ Offset-Policy & Opportunities
  2. 2. History Aerospace Clusters Offset Policy About this Presentation − Identifying potential of the particular market → Thanks to the previous speakers − Developing a fair knowledge of the market → Where is the main industry located? Suppliers, PSUs, SEZs? − Creating strategies for market entry → Mainly regulated market entry due to Offset Policies − Target → Findings/Conclusions through the Offset opportunity − Implementation → Joint Venture or Independent Entity in India Rechtsanwalt S. Boll ( 2
  3. 3. History Aerospace Clusters Offset Policy History & Development - Large Public Sector Units (PSUs) Unternehmen, die dem Staatssektor zugehören. 1911 First Airmail Service (Allahabad – Naini, carrying 6500 mails) 1940 Hindustan Aircraft Ltd - Luftfaht und Verteidigung waren bis 2001 ausschließlich den PSUs vorbehalten - 2001 erlaubte der Staat ggü. Privaten mit einer „Industrial Licence“ teilzunehmen - Defence Offset Policy 2006 / gefolgt von Liberalisierung in 2008 1942 Indian Institute of Science 1948 Aeronautical Society of India 1958 Defence R & D Org. 1959 National Aerospace Laboratories 1964 Hindustan Aeronautics - 2011 Offset Policy Govt. of India & AIRBUS Industries / Civil Aviation 2001 Opening to private Sector 2011 Offset Policy Civil Aviation Rechtsanwalt S. Boll ( 3
  4. 4. Aerospace Clusters
  5. 5. History Broad Aerospace Clusters overview of the Location Offset Policy of N o r t h Aerostructures CIM tools Dynamatic Technologies Ltd Hindustan Aeronautics Ltd(HAL) Pranitha Quest Recaero Tata Advanced Materials Ltd Titan Triveni Material Laxmi Precision Screws New Delhi W e s t Calcutta Mumbai PRS/IT Capgemini Incat System & Equipment Amphenol Eaton Godrej Industry S o u t h System & Equipment Applied Electro Magnetics Pvt Ltd Precision Electronics Samtel India Ltd Tata Power Aerostructures TAL the Hyderabad Bangalore Chennai Material Bharat forge Hindalco Almex Big Conglomerates Kirloskar Group L&T Group Mahindra Group Tata Group PRS/IT BAeHAL CADES HCL Infosys Infotech Mahindra Satyam TCS Wipro System & Equipment Alpha Design Ananth Technologies ASTRA BEL Data Pattern Detusch connectors Goodrich India HBL ISRO (Antrix) MachAero Maini Tyco VEM Technology Material Mishra Dhatu Nigam Ltd. (MIDHANI) Sundaram Rechtsanwalt S. Boll ( 5
  6. 6. History Aerospace Clusters H e a d q u a r t e r s o f t h e Va d o d a ra Offset Policy S u p p l i e r s Nagpur •TAL New Plant •L&T Composite Hyderabad •SKM •MTAR •Microtech Pune •TASL SEZ •TAL Okl Plant New Delhi B a nga lore Mumbai •HAL •TATA HQ •Dynamatics •L&T HQ Calcutta •Godrej •TAML •Quest Old Plant •Mahindra HQ •Pranitha Mumbai Belgaum •CIM Tools Hyderabad •Triveni Hitech •Quest SEZ •Titan •Servo Controls Bangalore •Recaero Chennai •Machaero •Maini G o a •Taneja •Kineco •Turbocam C o i m b a t o re Note: Core suppliers are highlighted in red color •L&T Precision Manufacturing Division Rechtsanwalt S. Boll ( 6
  7. 7. History Aerospace Clusters Offset Policy Suppliers are concentrated in the Western and Southern States of India M u m b a i THALES (Thales-Rolta) C4ISTAR information systems New Delhi Thales Engg Center SOPRA THALES (Thales-Rolta) Bangalore ALTRAN Engg Center Engg Center Airbus CAPGEMINI Engg Center Thales Airbus ASSYSTEM Avionics System Airbus Airbus, Bombardier GE GE GOODRICH MACH AERO Technology Center Evacuation slides Lighting systems Power drive units Precision Machines parts New Delhi Airbus & Boeing Safran Eurocopter REC AERO Precision Machines parts Engg Center ROCKWELL Airbus, Safran SAFRAN (Snecma-HAL) Pipes & end fittings Safran SILVER ATINA Engg Center Engg Center Hyderabad Design Center Rockwell Bangalore ALTEN Bangalore Chennai Airbus, IAI SONOVISION Hyderabad Mumbai Safran Eurocopter SAFRAN Calcutta Airbus Engg Center Airbus ATOS Origin Engg Center Airbus AXON Harness CABLEX Schneider Harness THALES ( Thales- BEL) Radars Thales DEUTSCH CONNECTOR Harness TITEFLEX Flexible hoses Safran LOGICA Engg Center TYCO Harness Airbus & Boeing Rechtsanwalt S. Boll ( CED Airbus 7
  8. 8. History Aerospace Clusters Offset Policy Indian Aviation and Supply Chain Number of Businesses and Geographical Distribution P u n j a b • 2 Companies Haryana New Delhi • 9 Companies • 9 Companies U t t a r Pradesh L u c k n o w • 9 Companies Gujarat •HAL Lucknow K a n p u r • 10 Companies • HAL Kanpur New Delhi Maharashtra K o r w a • 57 Companies (Nasik) • HAL Korwa Barrackpore B a n ga l o re Barrackpore • 213 Companies Hyderabad • 14 Companies K e r a l a • 8 Companies Bangalore Koraput • HAL Koraput Tamil Nadu Hyderabad • 36 Companies • 53 Companies Note: Core suppliers are highlighted in red color Rechtsanwalt S. Boll ( 8
  9. 9. Public Sector Units (PSUs)
  10. 10. History Aerospace Clusters Offset Policy PSUs are clustered mainly around Bangalore and Hyderabad. GSL Shipyards 99.4 M USD ( FY2008-09) 1620 Employees 1 Location, 1 manufacturing unit Garden Reach BEL Shipyards 177 M USD (FY 2009-10) 5,500 employees 1 Location, 7 Manufacturing units Electronics - Radars, Defence Communications, Telecommunications 1.1 B USD (FY 2009-10) 11,700 employees 9 Locations, 11 Manufacturing units New Delhi HAL Aeronautics ( Aircrafts, Helicopters,…) 2.37 B USD (FY 2009-10) 36,000 employees 7 locations, 11 Manufacturing units, 9 R&D centers ISRO Space 0.2 B USD (FY 2009-10) 17,000 employees 16 locations, 18 Manufacturing units including R&D centres Calcutta BDL Mumbai Hyderabad Goa Bangalore Missiles & Weapon Systems 130 M USD (FY 2009-10) 2788 employees 1 Location, 2 Manufacturing units) Chennai Midhani BEML Materials – Superalloys, Titanium, ... 77 M USD (FY 2009-10) 1500 employees 1 Location, 1 Manufacturing unit Mining & Construction , Defence., Rail 775 M USD (FY 2009-10) +12,600 employees 7 locations, 8 Manufacturing units) Rechtsanwalt S. Boll ( 10
  11. 11. Special Economic Zones (SEZs)
  12. 12. History Aerospace Clusters Offset Policy Special Economic Zones (SEZ) Government of India State Governments introduce „Aero Parks“ in combination with tax benefits; Field of Business: Design, Production, Maintenance; Role Model: Dubai, U.A.E., China und Singapore. Rechtsanwalt S. Boll ( 12
  13. 13. History Aerospace Clusters Offset Policy 7Special Economic Zones (SEZ) have been set by the Central Government. India started the economic reforms and special economic zones a decade later than China. Bangalore, Mumbai alw ays toped the ranking as business metros for infrastructural and other financial incentives. Due to saturation other major cities like Pune, Hyderabad, Nagpur, Chennai and Kolkata are also attracting more investments. Other 91 operational SEZs set by State Government Noida (UP) Multi Product New Delhi Falta Kolkata (West Bengal) Multi product Calcutta Kandla Visakhapatnam (Andhra Predesh) Multi product Multi Product Mumbai Mumbai (Maharashtra) Hyderabad Chennai (Tamil Nadu) Electronics, Gems Multi Product Bangalore Chennai Cochin (Kerala) Multi product Policy : SEZ is a designated duty free enclave and treated as foreign territory for trade operations, duties and tariffs Units can be set up for manufacturing, trading or service activity Supplies from domestic tariff areas to SEZ units treated as deemed exports 100% Income Tax exemption for 5 years and 50% exemption for 2 years thereafter 100% foreign direct investment (FDI) and full and free repatriation of export proceeds permitted SEZ units can dispose of rejects, waste, scrap in domestic market on payment of duties (Source: Sub contracting part of production is also permitted Incentives : Investment subsidy of 20% of fixed capital invested subject to a maximum of Rs.20 lakhs (0.05 Mil USD) Exemption from payment of stamp duty and registration fee on registration of lease deeds for plots/built up space in the zone. 25% rebate on power tariff for eligible software and IT enabled service units. In-house customs facilities to ensure speedy clearance of goods Dedicated power supply and Telecom connections on out-of-turn basis Rechtsanwalt S. Boll ( 13
  14. 14. Joint Venture (JV) Public ↔ Private
  15. 15. History Aerospace Clusters Offset Policy Joint Ventures in Indian Aerospace & Defense Industry BAeHAL Software Limited : Joint venture company of Hindustan Aeronautics Limited, and BAE Systems, UK. Deals with life cycle software development including design, development, testing, integration and Independent Verification & Validation for various aerospace and defence applications. Indo-Russian Aviation Limited (IRAL): A Joint Venture Company of Hindustan Aeronautics Ltd., ICICI Bank Ltd., RAC "MIG", Aviazapchast PLC & GRPZ. Deals with Supply of spares, rotables, consumables, sealents for operation and maintenance of aviation equipments for MIG fighter planes SAMTEL HAL DISPLAY SYSTEMS LTD : A joint venture between Hindustan Aeronautics Limited (HAL) and Samtel. Deals with avionics requirements of HAL cockpit displays of all kinds. Involved in system design, development, manufacturing, MRO and obsolescence management of display systems, ATE and IADS for all Indian platforms. HALBIT Avionics Pvt Ltd : A joint venture between Hindustan Aeronautics Limited (HAL) and Elbit (Israel). Deals with Avionics sub systems, simulators and training activities. HAL-Edgewood Technologies Pvt Ltd : A joint venture between Hindustan Aeronautics Limited (HAL) and Edgewood. Deals with semiconductors and telecommunication systems. INFOTECH HAL Ltd : A joint venture between Hindustan Aeronautics Limited (HAL) and Infotech Enterprises Ltd. Deals with design services in the field of aerospace -Aero thermo and mechanical design, structural, stress, thermal and rotor dynamic analysis, aeronautics, computational fluid dynamics, testing and analysis, control system design, development and software applications. Rechtsanwalt S. Boll ( HAL-INCAT : A Joint venture between Hindustan Aeronautics Limited (HAL) and INCAT is a Tata Technologies company. Deals with engineering and design services of aero structures. Snecma HAL Aerospace Pvt Ltd : Joint venture company of Snecma ( div of Safran Group) and HAL. Deals with components & hoses of CFM56 engines 15
  16. 16. History Aerospace Clusters Offset Policy Joint Ventures in Indian Aerospace & Defense Industry ROLTA - THALES: Rolta Thales Ltd. (RTL) is a joint Venture of Rolta with Thales, France. Thales is a world leader in Mission Critical Information Systems for the Defence, Aerospace and Security markets. RTL will take advantage of technology transfer from Thales for developing state-of-theart Command, Control, Communications, Computers, Intelligence, Surveillance, Target Acquisition and Reconnaissance (C4ISTAR) equipment systems to address opportunities in the Defence, Security and Aerospace segments. Mahindra Group Gippsland Aeronautics Pty Ltd & Aerostaff Australia Pty Ltd : Mahindra & Mahindra (M&M) acquired 2 Australian companies: Australia’s Aerostaff Australia (AA) and Gippsland Aeronautics (GA). Gippsland makes aircraft ( 8 seater and 18 seater) and Aerostaff makes high precision metal components for companies in businesses such as aviation and defence equipment. TATA - SIKORSKY : Tata group company Tata Advanced Systems has formed a joint venture with US-based Sikorsky Aircraft to make aerospace components in India. Sikorsky is a subsidiary of United Technologies Corp. The joint venture follows the long-term contract signed in June 2009 between the two companies to assemble Sikorsky S-92 helicopter cabins AIRBUS Airspace Infrastructure Pvt. Ltd : Airbus has formed a joint venture with an Indian and Turkish firm for spare parts and logistics support. The joint venture (Spares Support Solutions India), in which Airbus will hold 26 percent, will maintain an inventory of rotable components used on all types of Airbus commercial aircraft by operators in India for sale and exchange Rechtsanwalt S. Boll ( SAMTEL-THALES : Samtel Thales Avionics is a joint venture between Samtel and Thales for local development, production, sale and maintenance of Helmets Mounted Sight & Display (HMSD) and other Avionics Systems destined for the Indian market. QuEST – MAGELLAN: Aerospace Processing India (API) is joint venture between Magellan Aerospace Corporation and QuEST Global to provide approved aerospace surface treatments. 16
  17. 17. Offset Policy Overview Terminology, Rules & Regulations Which business is affected by this regulation? Market Entry Regulation vs. Offset Market Opportunity Emerging Trends in Indian Offset Market Findings/Conclusions for foreign businesses
  18. 18. History Aerospace Clusters Offset Policy Terminology Offset - signifies an element of 'compensation' as the predominant import of the term compensation / „Aufrechnung“ India’s Offset-Policy requires foreign aerospace and defense firms getting contracts from Indian firms to engage local units for manufacturing. India’s Offset Policy differentiates between Civil and Military Aviation. Rechtsanwalt S. Boll ( 18
  19. 19. History Aerospace Clusters Offset Policy There are two different Offset policies for Military & Civil Aerospace in India
  20. 20. History Aerospace Clusters Offset Policy Aerospace and Defense Offset Policy in India 2005: Defense Procurement Policy (DPP-2005), to benefit Indian Defense Industry Policy introduced 30% offset in contracts valued above Rs 3 billion under “buy” and 'buy and make” categories to develop Indian defense Industry 2nd Amendement 2008: • List of products exempted from policy (Annexure-VI of the DPP) • Removal of license to private industry to participate in offset programmed Offset policy in India DPP-2003 DPP-2005 DPP-2006 1st Amendement 2006: • Offset made mandatory as prescribed in DPP 2005 • Flexibility of forming joint ventures (JVs) with Indian firms • Establishment of Defense Offset Facilitation Agency (DOFA) DPP-2008 DPP-2009 DPP-2011 • further refinements, based on the experience and feedback from the defense industry, both Indian and foreign. • New definition of public and private sector within the DPP 2011 Rechtsanwalt S. Boll ( 20
  21. 21. Civil Aerospace Products mentioned in DPP-2011 1. All types of fixed wing as well as rotary aircraft including their air frames, aero engines, aircraft components and avionics. 2. Aircraft design and engineering services. 3. Technical publications 4. Raw material and semi-finished goods. 5. Flying training institutions and technical training institutions (excluding civil infrastructure). Rechtsanwalt S. Boll ( 21
  22. 22. Civil Aviation Offset Policy
  23. 23. History Aerospace Clusters Offset Policy Civil Aviation Offset Policy between the Government of India and Airbus Background: In 2006 the Government owned Airline „Indian Airlines“ (now “Air India”) placed an order over 2.1 Billion Euros. This was the kick-off for the civil aviation offset policy, which is a private unpublished contract. Both offset policies work hand in hand, since the DPP 2011 announced that a public sector programme can be considered under the civil as well as the military offset policy at the same time. Rechtsanwalt S. Boll ( 23
  24. 24. History Aerospace Clusters Offset Policy Offset Outsourcing Areas in Indian Aerospace Outsourcing Maturity in Aerospace Engine control systems Future outsourcing areas Air control management systems Navigation system Embedded development Control system design Simulation Emerging outsourcing opportunities High-level aeronautical system design Testing services Cockpit equipment support software Composite structuring Currently being undertaken by Indian IT vendors Non-core commonly outsourced Detailed design for modeling Manufacturing Drafting and field failure analysis Testing, validation and verification Technical documentation of designing work Rechtsanwalt S. Boll ( 24
  25. 25. History Aerospace Clusters Offset Policy Emerging Trends in Aerospace Offset Opportunities in India Growing Engineering services outsourcing (ESO) in India Trend A Increasing defense Budget spending Trend B Increasing domestic players involvement in Indian defense industry Trend C Emerging Trends in Aerospace Offset Opportunities in India Trend D Rechtsanwalt S. Boll ( Increasing overseas suppliers involvement in Indian defense industry 25
  26. 26. History Aerospace Clusters Offset Policy Key Success Factors Key Success Factors Key Success Factors of Offset Policies To get outsourced projects from Tier-1 or Tier-2 players from Europe and USA. Look for outsourced projects from HAL. JV with global Tier-1 and Tier-2 companies to enter the offset market. 2008 These Projects/components will be manufactured in India and then sold on the European and American markets. Repair and maintenance of components and Building of MRO Units – Maintenance, Repair and Overhaul 2016 Rechtsanwalt S. Boll ( 26
  27. 27. History Aerospace Clusters Offset Policy Press Reviews „India poised to become world‘s third largest civil aviation market.“ (Aeromag Asia, Vol. V, Aug. 2011, page 8) Rechtsanwalt S. Boll ( 27
  28. 28. History Aerospace Clusters Offset Policy Implementation Joint Venture Independent Legal Entity e.g. Pvt. Ltd. (Company Act of India). Rechtsanwalt S. Boll ( 28
  29. 29. Disclaimer This document provides certain general information existing as at the time of production. This presentation does not purport to identify all the issues or developments on the matters covered in this presentation. Accordingly this document should neither be regarded as comprehensive nor sufficient for the purposes of decision making. This information provided is not, nor is it intended to be an advice on any matter and should not be relied on as such. Professional advice should be sought before taking action on any of the information contained in it. This document may not be used by or distributed to any parties outside the Recipient. Rechtsanwalt S. Boll ( 29
  30. 30. Thank you! Sebastian Boll Rechtsanwalt / Attorney at Law Rothenbaumchaussee 71 D-20148 Hamburg Tel. +49 (0)40 4450 6157 Fax. +49 (0)40 4450 6158 Rechtsanwalt S. Boll ( 30