The document provides an overview of opportunities for market entry in India's aerospace industry. It discusses the history and development of India's aerospace sector, including the establishment of major public sector units and clusters of private suppliers. It notes that suppliers are concentrated in major cities like Bangalore, Hyderabad, and Mumbai. The document also examines India's special economic zones and joint venture partnerships between Indian and foreign companies. Finally, it provides an introduction to India's offset policy and regulations governing technology transfer agreements and local production requirements for foreign aerospace firms operating in the country.

1. India Market Entry
Rechtsanwalt S. Boll
18. Oktober 2011
History in Brief
Aerospace Clusters / Supply Chain / PSU / SEZ
Offset-Policy & Opportunities

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
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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
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4. Aerospace Clusters

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
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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
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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
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CED
Airbus
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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
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9. Public Sector Units
(PSUs)

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)
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11. Special Economic Zones
(SEZs)

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.
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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
Indiaground.com)
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14. Joint Venture
(JV)
Public ↔ Private

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.
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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
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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
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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. 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. 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.
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19. History
Aerospace Clusters
Offset Policy
There are two different Offset
policies for Military & Civil
Aerospace in India

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
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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).
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22. Civil Aviation Offset Policy

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.
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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
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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
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Increasing overseas
suppliers involvement in
Indian defense industry
25

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
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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)
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28. History
Aerospace Clusters
Offset Policy
Implementation
Joint Venture
Independent Legal Entity e.g. Pvt. Ltd.
(Company Act of India).
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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.
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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
www.ra-boll.de
info@ra-boll.de
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