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TRANSCRIPT
INDUSTRY REPORT
AEROSPACE AND DEFENCE 2018
Compiled for Knowledge partner
November | 2018
I N D E X• OverviewofAerospace&DefenceIndustryinIndia 03• WhyTelangana&AndhraPradesh? 04• DemandDrivers
ExistingconduciveEcosystem 08GrowingbaseofMaintenanceRepair&Overhaul(MRO) 10
• InitiativesandPolicySupportbyGovernment 12• WhyHyderabadasaDestinationforOrganizing
ExposonAerospace&Defence 13
OverviewofAerospace&Defence
IndustryinIndiaEstimatedmarketsizeofAerospace&DefenceisforFY2017-18US$50-55Billion&expectedtogrowtoUS$100Billionoverthenext10years.
Aerospace&DefenceinTelangana&
AndhraPradesh(referasAPinreport)HyderabadisconsideredasthemissilecenterofIndiawithseveralpublicsectordefencelabsandmissilemanufacturingfacilitieslocatedhere.
Telanganaistargetingashareof15-20%marketshareintheaerospaceanddefencesectorinIndia.
Presenceofabout1,000aerospaceanddefencerelatedsmallandmediumenterprisesaddstoitsstrengthinthedomain.
HomefororganizationslikeDefenceResearchandDevelopmentOrganization(DRDO),BharatDynamicsLimited(BDL)andHindustanAeronauticsLimited(HAL)andmultipleR&Dlabs,Hyderabadpresentstheidealeco-system.
A&D
CivilAviation
US$16BILLIOn
CAGR
12-14%
CAGR
08-10%US$42BILLIOn
Defence
Aerospace&DefenceClusterof
Telangana&AP• ProposedAerotropolisatBhogapuram
• UAVClusteratWestGodavari
• BELfacilityatMachilipatna
• AerospaceandDefenceParkatAnanthapuram
• RadarTestBedFacilityatAnanthapuram
• Defencecorridorsbeingplanned
• DefenceparkinEliminedu
• AerospaceclusterinMedakdistrict
Sources:
1)Telangana&AndhraPradeshGovernmentwebsite|2)AndhraPradeshpolicyandstrategy:2015-20
WhyTelangana&AndhraPradesh?(1/4)• MajorstrengthofHyderabadisthepresenceof1,000+(SMEs),someofwhichare
makingpartsofmissiles,launchers,satellites,aircraft,submarineandarmaments
• Somecrucialcomponentsofinter-planetaryvehicleofISRO’sMangalyaanwere
sourcedfromthecity
• Over70%ofAkshayMissile’scomponentsaremadeinthecity’sSMEs
• Hyderabadalsogets30%oftheoutsourcedworkofISROonthespacefront
ExistingPartners
Sources:
1)Telangana&AndhraPradeshGovernmentwebsite|2)AndhraPradeshpolicyandstrategy:2015-20
Recent Investments
• Telanganahasidentifiedaerospace
anddefenceaspriorityindustries
andhastwooperationalAerospace
ManufacturingParksnearAdibatla
region,besidesanaerospacepark
operatedbyGMRadjoiningthe
internationalairport
• TheStateisalsoplanningtosetup
alargeraerospaceanddefence
parkinElimineduandcreateanother
aerospaceclusterwithinthenational
InvestmentsandManufacturingZone
inMedakdistrictwithaninvestmentof
INR 2,500 Crore in next 3-4 years
• DRDOhasproposedaCentreof
Excellenceforsmartmanufacturing
inaerospaceanddefencesectors
inandaroundthecity.Forthis,they
haveplannedinvestINR 64,000
Crore by2025inHyderabad
• TATAAdvancedSystemsLimited
(TASL)hasfourunitsinpartnership
withaerospacegiantsSikorsky,
LockheedMartin,PilatusandRUAG
Aviation.TheyinvestedInR4,000
Croresofar.
• ThecabinoftheSikorskyS-92
chopperthatferriestheUS
PresidentDonaldTrumpwasmade
inHyderabad
• TASLsignedanagreement
withLockheedMartininJuneto
producetheF-16Block
70aircraft,thelatestandmost
advancedversionoftheworld’s
mostsuccessful,combat-proven
multi-rolefighter
• TASLisexecutingamission
controlandcommunicationcenter
foramajormissiledefence
programmeofDRDO
• Hyderabadisexpectedtobethe
baseforTASLandAirbus’sjoint
venturetoreplace the
IndianAirForcefleetof56Avro
aircraftwiththeAirbusC-295
• TASLandBoeingtocollaborate
andexplorepotentialintegrated
systemsdevelopment
opportunities,includingunmanned
aerialvehicles
• Frenchaerospaceanddefence
equipmentmakerSafranElectrical&
PowerSASisplanningtosetupshop
inHyderabad,andhassignedaMoU
withthegovernment.Theunitwillbe
setupatacostofInR52Croreand
isexpectedtocreateemployment
opportunitiesfor250people
WhyTelangana&AndhraPradesh?(2/4)
Sources:
1)Telangana&AndhraPradeshGovernmentwebsite|2)AndhraPradeshpolicyandstrategy:2015-20
AdaniwillstartanewplantinHyderabadtomanufacturecompositeaerostructureintie-upwithElbitSystemsofIsrael,withaninitialinvestmentof$15million,whichwillgoupto$100milliondependingontheorderfromthegovernment
KalyaniRafaelAdvancedSystem(KRAS),ajointventurebetweenIsrael’sRafaelandKalyaniStrategicSystems,willproducethethirdgenerationSpikeanti-tankguidedmissile(ATGM)fortheIndianArmy.ThestateofartfacilityisthebiggestFDIinDefencevaluedabout$1billion
Pratt&Whitney,aleaderinaircraftenginemanufacturinghassetupitstrainingcenterinHyderabad,thethirdsuchaftertheUSandChina
AirIndiaalsorecentlysetupanMROfacilityatHyderabadairporttoserviceitsaircraft
Thecountry’sfirstDefenceincubatorswillcomeupinHyderabad,andwillbehousedatT-Hub,whichhasalreadygotrecognitionasoneofthecountry’smajorcentresfornurturingstart-upsandcreativeideas
TheincubatorwillbefundedthroughtheMinistry’sInnovationforDefence Exellence(iDEX)scheme(TheiDEXwillbefundedandmanagedbyaDefence InnovationOrganisation(DIO).
Initially,acorpusofInR100CrorehasbeencreatedbytwoPSUs-HALandBEL, eachcontributingINR 50 Crore.MoredefencePSUswilljoininwith financialcontributionswhenrequired.Similarly,theMinistryofDefencealsowill extendfundswhennecessary
Telanganaiskeentobecomeaskillhubforaerospaceindustry
GovernmentofTelanganaiskeentoestablishanAviationUniversityin HyderabadandhavebeguntalkswiththeMinistryofCivilAviation
DiscussionsarealsogoingonforsettingupofspecializedAerospaceSchools/ CentreofExcellence(COE)inHyderabad,tomeetthegrowingdemandsofA&D industriesinHyderabad.ThestategovernmenthassignedaMoUwithUK-based CranfieldUniversitytocreateanaviationuniversityinHyderabad
Sources:
1)Telangana&AndhraPradeshGovernmentwebsite|2)AndhraPradeshpolicyandstrategy:2015-20
WhyTelangana&AndhraPradesh?(3/4)
WhyTelangana&AndhraPradesh?(4/4)
Andhra Pradesh
ExistingPartners UpcomingPartners
Sources:
AndhraPradeshpolicyandstrategy:2015-20
KeyHighlights• 6existingairports;1majorand3no-
frillsairportsplanned
• EasternnavalCommandHQinVisakhapatnam
• PresenceofISRO,HindustanShipyard,BharatElectronics,andotherdefencePSUs
• UpcomingnavalshipbuildingfacilitybyRelianceDefenceatRambilli,Visakhapatnam
• UpcomingweaponsintegrationfacilityinWestGodavaridistrict
• DedicatedA&DparknearPalasamudram,Anantapurdistrict
• Missiletestingfacilityplannedinnagayalanka,Krishnadistrict
• World-classMROfacilityandaircargocomplexplannedatproposedBhogapuramMegaAerotropolis
KeyPolicyTargets2020–A&DIndustry
InR20,000 Crore
5,000 newJobs
• MajorClusters/Parks
• AerospaceandDefencePark(onPPPbasis)inAnantapurandChittoor/nelloredistricts
• World-classMaintenance,RepairandOverhaul(MRO)facilityasapartofproposedBhogapuramAerotropolisnearVisakhapatnam
• AirCargocomplexnearisakhapatnam
• AerospaceandDefenceindustrialparkinPalasamudram,Anantapur
Key Initiatives• EstablishmentofAerospace&
Defenceclustersforecosystemdevelopment
• PermissiontoAerospaceandDefencemanufacturingindustryfor24x7(threeshiftoperations);employmentofwomeninnightshift
• A&Dmanufacturingindustrydeclaredtobea‘PublicUtility’undertheIndustriesDisputesAct,1947
•
And
hra
Pra
desh
T-Works,GovernmentofTelangana’sinitiative,actsasaprototypingcentreforelectronics,semiconductorsandhardwarestart-ups
• At250,000sq.ft.,T-Workswillbeoneoftheworld’slargesthardwareprototypingfacilities
• Phase-1consistsof~70,000sq.ft.areaandequipmentworthInR10Crore
ExistingPartners
Sources:
1)Telangana&AndhraPradeshGovernmentwebsite|2)AndhraPradeshpolicyandstrategy:2015-20
ExistingconduciveEcosystem - Growing Electronics Industry Hyderabad,currently,ismarchingtowardsestablishingitselfasoneoftheleadingelectronichubs globally.Ithousesover250companies,bothlargeandsmallwhichtogetheremploygreaterthan50,000professionals
By2020,TelanganaStatetargetstoachievemorethanInR120,000CroreworthofITexportsbygrowingataCAGRof16%andcreatemorethan4Lakhofdirectemploymentand20Lakhofindirectemployment
LaunchedIoTPolicy2017tocreateanatmosphereconduciveforIoTspecificbusinessesandmanufacturingunitstothriveintheState
Attractinvestmentsworth10,000Crore&generatedirectemployment
Note:ThestatisticswereprovidedbyDirectorofSoftwareTechnologyParksofIndia(STPI)andDevelopmentCommissioner,SEZ)
Growth in IT/ITES Exports %
All India (Projected by NASSCOM) 7 to 9
Telangana 9.32
DemandDriver(1/4)
Sources:
1)Telangana&AndhraPradeshGovernmentwebsite|2)AndhraPradeshpolicyandstrategy:2015-20
ExistingconduciveEcosystem - Growing Electronics Industry
Cyient–globalprovidersofengineering,networks,digitalandoperationsmanagementsolutions–signedanMoUwiththeTelanganaAcademyforskillandKnowledge(TASK)
Itwillbebasedon“train-and-hire”modelforfourth-yearstudentsinTASKregisteredengineeringcolleges
Governmentisalsoprojectingtier2&3citiesasanattractivedestinations
forstartupsandtechcompaniesinthis
sectorv
TheTelanganagovernmenthasidentifiedfivelocations-Warangal , Karimnagar, Nizamabad, Khammam and Mahabubnagar
ThegovernmenthassanctionedInR25CroreineachofthesetownstosetupIThubs
WarangaltobethenextbigtechhubafterHyderabad,onthelinesofBengaluru-Mysuru
Cyienthasalreadysetupacampus,whereitwillemployaround1,000peopleinphasesinWarangal
TechMahindratoo,willbesoonsettingupacampusinWarangalandwillbeemploying500ITprofessionals
Thestategovernmentisinadvancetalkswith3-4
moretechmajorstosetupcentresinthecity
andhopestoformalizetalksandhavethemsetup
operationsbytheendofthisyear
DemandDriver(2/4)
Sources:
1)EconomicTimes|TheHindu|TelanganaToday
RawMaterialDefencePSUMidhanieyeingtocutdependencyonChineseimports.• TheMishraDhatunigam(Midhani)LimitedisreducingdependencyonChinafor
thestrategicmetalsusedindefence.
• DetailedprojectReportfortheproposedjointventurewithnalcotomanufacturealuminumalloysatnellore.
• IthaspartneredwithanotherPSUnMDCLimited,isindiscussionswithVietnam-basedMasanResourcestoacquireminoritystakeinaTungstenmine.
Centreofexcellencemootedforworkoncomposites.• TelanganaandAndhraCompositesManufacturersAssociation(TAACMA)and
FRPInstitutewiththesupportofTelanganagovernmenthasorganizedthetwo-dayinternationalconferenceinHyderabad.
• Thiscentreofexcellencewillbeworkinginthefuturisticareas-smartcomposites,selfdiagnosticcompositesorselfhealingcomposites,nanocomposites,leancomposites&highperformancecarbonfibers.
• Defenceandaerospacesectorisoneofthe14thrustsectorsidentifiedforgrowthbytheStategovernment.Acompositemanufacturingclusteron123acreswasbeingsetupinIbrahimpatnam
F-16productioncanmakeIndiafighterjetexporthub:LockheedMartin• GlobalaerospacegiantLockheedMartinintendsltomanufacturecustom-built
F-16fighterjetsinIndiawillmakethecountryanexporthubandgiveitaccesstoanestimated$165billionfighteraircraftmarketoverthenextfewdecades.
• TataLockheedMartinAerostructuresLimited(TLMAL),ajointventurebetweenTataAdvancedSystemsLimited(TASL)andLockheedMartin,inauguratedIndia’sfirst-of-its-kindmetal-to-metalbondingfacilityatAdibatlainHyderabad.
DemandDriver(3/4)
Sources:
1)TelanganaToday,Livemint
2.GrowingbaseofMaintenanceRepair&Overhaul(MRO)GMR Aero Technic, (GATL), a 100%, a subsidiary of GMR Hyderabad International Airport Ltd (GHIAL) has received the Federal Aviation Administration (FAA) approval on popular Narrow Body Aircraft (B737 and A320), Making it an authorized MRO services provider for all C checks for FAA registered B737/A320 aircraft and for NDT (Non Destructive Testing) inspections
• Currently,GATLholdsthelargestshareofthemarketforoutsourcedairframeBaseMaintenanceMRObusinessinIndia,andapprovedbythefollowingcertificationsfromacrosstheglobe
• GATListhefirstthirdpartyMROintheSouthAsiaregiontohavecarriedoutC-checksonthelatestAirbusA320neovariant
• OnlyAuthorizedServiceFacilityforBombardierQ400aircraftintheregion
• GATL’sotherfocusareasincludeDefenceMRO,smallercomponentmaintenanceandvariousspecializedservicesalongwithaircraftliverypainting
• Embraer,AirIndiatosetupMROfacilityinSecunderabad
• BrazilianaerospacemajorEmbraerhaspartneredwithstate-ownedAirIndiatosetupamaintenanceandrepairMROfacilitytomaintainitsbrandofprivateandbusinessjetsintheentireSoutheastAsianregion
• TheproposedfacilityisexpectedtocomeupattheBegumpetairportinSecunderabadinTelangana
DemandDriver(4/4)
• TelanganagovernmentispreparingapolicyforDefenceandAerospacesector
• TheTelanganagovernmenthastakena
numberofinitiativestodevelopaDefence
&Aerospacesegmentbydevelopingan
exclusiveHub,AeroSkillsAcademyin
collaborationwithAerocampusAquitaine,
FranceandAerospaceIncubationCentrein
collaborationwithIIT,Hyderabad
• AerospaceandPrecisionEngineeringSEZ
atAdibatla:TheAerospaceSEZatAdibatla,
IbrahimpatnamMandalofRangareddyspread
of500acresisfullyfunctional
• Telanganagovernmentisproposingtoset
upthreemoreDefenceandAerospace
parksontheoutskirtsofthecityhereover
thenextfouryearswithaninvestmentofInR
2,500Crore
AndhraPradesh
• Attractatleast4anchorunitinvestments
ofoverInR1000Croreeachinthesectorin
thepolicyperiod
• Attractordersforatleast10%ofalloffset
obligationsdischargedbycompaniesinIndia
overthepolicyperiod
• GoAPaimstoattractatleastoneDPSUinto
APinthenext5years
• FiscalIncentivesprovided:
1.TaxIncentives
• netVAT/CST/SGSTreimbursements
forMSMEandlargeA&Dunits
shallbeasperthenewIndustrial
DevelopmentPolicy2015-20
• 100%exemptionfromEntryTax
on‘Plant&Machineryandcapital
goods’foraninitialperiodof3
years(orpolicyvalidityperiod,
whicheverisearlier)fromthedate
ofcommencement
• Foraircraftswhicharebrought
inspecificallyforMROinAndhra
Pradesh,100%reimbursementof
VAT/CST/SGSTonallinputmaterial
(excludingAviationTurbineFuel)
2.CapitalSubsidy
• AnchorunitsubsidyofInR10Crore
eachshallbeofferedtofirst10
aerospaceand/ordefenceOEM
enterprisesestablishedduringthe
policyperiod
InitiativesandPolicySupportbyGovernment(1/2)
Sources:
1)TelanganaToday,Livemint
Why Hyderabad as a Destination for Organizing Expos on Aerospace & Defence
Why Hyderabad?• HyderabadisthemissilecenterofIndiawithhometopublicsectordefencelabsandmissilemanufacturingfacilitieslocatedhere
• Thepresenceofabout1,000aerospaceanddefencerelatedsmallandmediumenterprisesaddstoitsstrengthinthedomain.AsthehometocampusesoforganizationslikeDefenceResearchandDevelopmentOrganization(DRDO),BharatDynamicsLimited(BDL)andHindustanAeronauticsLimited(HAL)andmultipleR&DlabsHyderabadpresentstheidealeco-system
• IndustryleaderssaythatthecityhasbecomethegroundforimplementingtheMakeinIndiainitiativeasseveralglobalgiantshavejoinedhandswithIndianplayerstosetupmanufacturingunits
• HyderabadisawellconnectedlocationforExhibitorsaswellasVisitors
• Roadconnectivity:ThedensityofnotifiednationalhighwaysinTelanganais2.90km/100sq.kmagainstthenationalaverageof2.84km/100sq.km
• Strongrailwayconnectivity:TheStatealsohasanintegratedrailwaynetworkwithrailwayterminalssuchas-nizamabad,Mahbubnagar,KammaReddy,Bodhan,Jedcherala,Gadwaland,Balanagar
• Accesstoworldclassairportfacility:RajivGandhiInternationalAirport(RGIA),Shamshabadisoneofthelargest7modernairportsinIndia
• GovernmentofTelanganahasenteredMoUwithMinistryofCivilAviationandAirportsAuthorityofIndiafordevelopmentofsmallairportsatKothagudemandWarangal
• GovernmentofTelanganaisrankedno1inEaseofDoingBusinessgivenbyDepartmentofIndustrialPolicy&Promotion(DIPP)andWorldBank
• StateofTelanganahasuniquegeographicaladvantage.ItgeographicallyplacedincloseproximitytomajorconsumermarketssuchasBangalore,Mumbai,Kolkata,Chennaietc.
3.PatentCost/QualityCertificationcostreimbursement
• Governmentwillprovidefinancial
assistancelimitedto75%ofthecost,
subjecttoamaximumofInR25Lakh
forobtainingpatentregistration
and50%ofallcharges,subjectto
amaximumofInR5Lakhpaidfor
obtainingqualitycertification
4.PromotionofDefencePublicSectorUnitsandR&DCenters
• R&Dinvestmentsindefenceabove
InR10Crorewouldbeeligiblefora
10%subsidyoninvestments
subjecttoamaximumofInR10
Croreperinvestment
InitiativesandPolicySupportbyGovernment(2/2)
Sources:
APGovernmentwebsite
Contact:SambitKumarMund|+917337518888
HYDERABADInTERnATIOnALTRADEEXPOSITOnSLTD.
TradeFairOfficeBuilding,FirstFloor,HITEXExhibitionCentre,Izzatnagar,Hyderabad-500084
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