Aerospace & Defence
Aerospace & Defence
Outline
Global Aerospace & Defence Outlook1
India Scenario2
Advantage Gujarat3
Dholera Special Investment Region4
Opportunities Galore5
Global Outlook
Source: Stockholm International Peace Research Institute (SIPRI) 2020 Fact Sheet
USA, 38
China, 13.6
India, 3.7
Russia, 3.4
Saudi Arabia, 3.3
Germany, 2.6
Japan, 2.5
South Korea,
2.3
Others, 31
Global Aerospace & Defence (A&D) market is estimatedto be valued at US$ 1600 billion by 2025
Share of world military expenditure (2019)
Source: https://www.weforum.org/agenda/2019/04/4-charts-that-show-the-state-of-global-military-spending-now-at-its-highest-since-the-cold-war/; SIPRI Military Expenditure Database, Apr. 2020
Global military expenditure was US$ 1917 billionaccounting for 2.2% of global GDP in 2019
The top five spenders in 2019 were the USA, China, India,Russia, and Saudi Arabia accounting for 62% of global militaryspending
Average military spending was 1.4% of GDP for countries inthe Americas, 1.6% for Africa, 1.7% for Asia and Oceania andfor Europe and 4.5% for the Middle East
India Scenario
Source: Ministry of Defence, Govt. of India; Make in India; World Military Balance 2016 Report – International Institute for Strategic Studies;
1 US$ ~ INR 70
2nd largest armed forces in the world
3rd largest in military expenditure US$ 71.1 billion (2019)(2.4% of GDP and 3.7% of the global military expenditure)
Defence budget US$ 66.9 billion (INR 4,71,378 crore) for 2020-21 (15.5% of total budget and growth of 9.4% over 2019-20)
FDI worth US$ 8.82 million (INR 61.74 crore) in Defence Sector (Apr 2000 – Dec 2019)
`
The Indian A&D market is estimated to reach around US$ 26 billion by 2025
Key Facts
US$ 1.5 billion worth
of exports 2018-19
15%share in
Global arms import market
US$ 5 billion export target
by 2025
Ministry of Defence, Govt. of India; DIPP; Institute for Defence Studies and Analyses (IDSA)
US$ 7.3 billion worth of
ongoing DRDO projects
Make in India - Defence Production
Source: Ministry of Defence, Government of India; Institute for Defence Studies and Analyses (IDSA) reports
• 52 offset contracts signed by MoD worth US$ 11.79 billion till March 2019
• 452 industrial licenses issued for manufacturing of Defence items till October 2019
• By 2030, US$ 13.5 billion worth of defence offset obligations would be discharged by foreign OEMs
Defence Production Policy 2018
• Defence procurement from Indian vendors worth US$ 10.56 billion (INR 73,918 crore) in 2018-19
• 41 Ordnance Factories and 9 DPSUs contributing to defence production of more than US$ 8.29 billion (INR 58,000 crore)
• Defence procurement from foreign vendors worth US$ 23.66 billion (INR 1,65,590 crore) in 2018-19
Defence Offset Policy
List of Products and Services eligible for Discharge of Offset Obligations
Defence Products Small arms, mortars, cannons, guns, howitzers, anti tank weapons and their ammunition including fuzes, etc.
Products for inland/ coastal security
Arms and their ammunition, Specialised Protective Equipment, etc.
Civil Aerospace Products
Design, Development, Manufacture and Upgrade of all types of fixed wing and rotary wing aircraft or their airframes, aero engines, avionics, instruments and related components
Services (related to eligible products)
(a) Maintenance, repair and overhaul.(b) Up gradation/life extension(c) Engineering, design and testing(d) Software development(e) Quality assurance(f) Training(g) Research and Development services
Robust Value Chain
Source: Ministry of Defence, Government of India; https://www.maiervidorno.com/industry-expertise/aerospace-defence/
• Innovation for Defence Excellence (iDex) hubs across the country• US$ 15.4 million allocated to set up Technology Development Fund for R&D
• Defence Production Policy 2018 to promote domestic production and assembly by public sector, private sector and MSMEs
• India’s current MRO market size is estimated to be around US$ 750 million• Indian MRO spending is worth US$ 1.5 billion
Research & Development
Engineering Design
Manufacturing
Assembly
Aftermarket
MRO
• Potential of US$ 1 trillion by 2025 in the defence manufacturing sector • Development of Manufacturing Clusters & Parks
• Defence industrial corridors to promote participation of startups and SMEs• Introduction of Indigenously Designed, Developed and Manufacture (IDDM)
FDI limit increased to 74% from 49% under automatic route to attract MNCs and give an impetus to the sector under ‘Make in India’
Industry Trends
Source: https://reports.weforum.org/manufacturing-growth/aerospace-industry; https://defproac.com/?p=1438
‘Make in India’ Focus
100% FDI in defence sector
Defence Production Policy 2018
Growing defence budget
Great potential of MRO Market
Gro
wth
D
rive
rs
Europe33%
Americas41%
Asia26% Europe
33%
Americas33%
Asia34%
MRO Market Share shifts to Asia
2012 2025
• Asia will be the largest market, accounting for 34%
global value
• Global MRO spending to cross the US$ 110 billion mark
by 2025
• Indian MRO industry is expected to grow to over US$
4.33 billion by 2025
India plans to spend US$ 130 billion on military modernization by 2025
Competitive Landscape
Defence Public Sector Undertakings Private Sector International Investors
Advantage GujaratManufacturing Powerhouse
Source: Socio Economic Review, Gujarat (2019-20)
Gujarat’s Gross State Domestic Product (GSDP) at current prices grew at 13.1% in 2018-19
State contributes 36% to manufacturing sector
State contributes 16.85% to India’s total industrial output
More than 3.3 million MSMEs in Gujarat (NSS 73rd round, 2015-16)
INR 1450 Crore allocated towards development of Industries including MSMEs
US$ 26.66 billion worth of FDI
inflow (Apr 2000–Mar 2020)
10% contribution to India’s factory establishments
16.85%14.86%
10.70%
6.55% 6.38%
Gujarat Maharashtra Tamilnadu Karnatka UttarPradesh
Percentage share in India's total output
Establishment of GUJSAIL to enable the growth of the air hub and aviation industry
17 operational airports and airstrips and upcoming International airport at Dholera
Strategic location for MRO activities and proximity to Delhi-Mumbai Industrial Corridor (DMIC)
Gujarat - Favorable Destination for A&D Sector
Presence of engineering clusters and MSMEs to support state’s A&D plans
MRO - A growing Segment
Indian MRO industry is
worth US$ 750 million
(2018-19)
Global MRO Industry is
worth US$ 45 billion
(2018-19)
MRO in Gujarat
• GUJSAIL has recently set up a General Aviation MRO in Ahmedabad
• It has parking facilities for two aircraft and is equipped with repair shop, store for parts and
equipment, offices and other facilities
• It can handle airframe heavy maintenance, component services, line maintenance and
inspection of private business aircraft and also planes used for other purposes
• A Legacy 650 was one of the first aircrafts to come to this MRO
1
2
3
4
Source: Civil Aviation Department, Government of Gujarat
Dholera Special Investment Region
Dholera
Vadodara
150 km
100 km
50 km
200 km
Ahmedabad
Dessa
Kandla
Porbandar
Keshod
Rajkot
Mundra
Mithapur
KhavadaChasbet
Radhanpu
r Mehsana
Drangadhara
Wadhwan
Limbdi
Amreli
Morvi
Wankaner
Parsoli
Bhuj
Jamnagar
Nalilya
Chela
Khambalia
Bhavnaga
r
Vadsar
L&T Shipbuilding @ Hazira
Reliance Naval and Engineering Limited @ Pipavav
L&T Ranoli Manufacturing facility
Passenger and Cargo
Private Airstrips
Existing private sector defence facilities
Defence Airports
Airforce Base State Govt. Airstrips
Advantage Dholera
1. Potential of Defence and Aero Manufacturing Clusters• Provision of Helipad• Adequate space for Testing Airstrip /
Runway• Strategic location of Ancillary Industries• Future expansion of industries possible
2. Proximity to Dholera International Airport• Proposed International Passenger and
Cargo Terminal• Two runways for smooth operation• Great potential to setup MRO
3. Presence of over 35 R&D facilities across state focusing on manufacturing sector
4. Availability of contiguous land parcels for testing range
Incentives (Aerospace & Defence Policy 2016)
Incentives offered as per policy
Capital Investment Subsidy to MSME A&D enterprises
1. Micro units: 25% of eligible fixed capital investment with ceiling of ₹ 12.5 lakh2. Small units: 25% of eligible fixed capital investment with ceiling of ₹ 1.25 crores3. Medium units: 25% of eligible fixed capital investment with ceiling of ₹ 2.5 crores
Land 100% reimbursement of the stamp duty as well as registration fee paid to Government towards lease/sale/transfer of land. Government will support A&D testing ranges/sites in State for testing of Products
Interest Subsidy 1. Mega A&D - ECB or DB - maximum of 2-5% or 50% of interest rate whichever is lower; upto ₹ 10 Crores per annum for 5 years
2. Large A&D - ECB or DB - maximum of 2-5% or 50% of interest rate whichever is lower; up to ₹ 5 Crores per annum for 5 years
3. MSME - ECB or DB - maximum of 2-7% or 50% of interest rate whichever is lower; up to ₹ 1 Crore per annum for 5 years
GST Reimbursement
SGST will be reimbursed subject to overall ceiling of 90% of GFCI as maximum eligibility for reimbursement. It will be allowed for 10 years from the date of production.
Source: Gujarat Aerospace & Defence Policy 2016; https://www.makeinindiadefence.gov.in/admin/writereaddata/upload/files/Gujarat%20State%20policy.pdf
Incentives (Aerospace & Defence Policy 2016)
Incentives offered as per policy
Power Tariff andElectricity Duty
1. Power tariff subsidy at ₹ 1 per unit in the billed amount for period of 5 years2. 100% reimbursement for electricity duty paid by it for period of 5 years from the
date of commencement of production
Skill Development 1. Mega A&D - 50% of cost of training up to maximum of ₹ 1 lakh per employee per annum for 25 employees
2. Large A&D - 50% of cost of training up to maximum of ₹ 1 lakh per employee per annum for 20 employees
3. Large A&D - 70% of cost of training up to maximum of ₹ 10000 per employee per annum for 10 employees
R&D Support 50% capital subsidy to maximum of ₹ 5 Crores
Equity Support Government may participate in the equity share capital of Mega orLarge A&D enterprise directly or through State PSU
Patent Assistance Assist MSMEs in patent and copyrights
Quality Certification Assistance in obtaining quality certification
Source: Gujarat Aerospace & Defence Policy 2016; https://www.makeinindiadefence.gov.in/admin/writereaddata/upload/files/Gujarat%20State%20policy.pdf
Success Stories
Private companies have received 20 licenses for setting up A&D manufacturing units in Gujarat
• It has established a new green-field manufacturing – integration – testing complex at Hazira, Gujarat
• Currently executing the ‘K9 VAJRA-T’ Self-Propelled Howitzer Guns program - the largest contract awarded to an Indian private company by the MoD
• Company has already invested more than INR 250 crore and employs more than 800 people
Larsen & Toubro Ltd Jaivel Aerospace Pvt Ltd
• It is a manufacturing, technology, processes and tooling organization set up in Sanand, Gujarat
• It has invested more than INR 20 crore and employs over 140 people
Source: Industries Commissionerate, Government of Gujarat
Unique Forge (Guj) Pvt Ltd
• It manufactures Bomb Body, Pistol Body, Gears, Driving Flange and other forged products and supplies to Ministry of Defence
• Investment of INR 3.5 crore and employs over 35 people
Opportunities Galore
Aircraft Assembly and Manufacturing
Artillery Combat Vehicles
Shipbuilding
Defence-tech fabrics and Composites
Casting & Forging
Products
Maintenance, Repair & Overhaul
Research & Development
Ammunition & Small Arms
A&D Electronic
Systems
Industries Commissionerate
Block No. 1, 2nd Floor, Udyog Bhavan, Gandhinagar, Gujarat, India - 382 010http://ic.gujarat.gov.in/ Phone: 079-23252683E-mail: [email protected]
Industrial Extension Bureau (iNDEXTb)
Block No. 18, 2nd floor, Udyog Bhavan, Gandhinagar, Gujarat, India – 382 010www.indextb.com Phone: 079-2325 6009E-mail: [email protected]
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