Having worked across various industries, what are the capabilities and change management lessons that you brought to AIDAT so as to act as a catalyst in setting up the A&D hub in Tamil Nadu? Any plans to extend it beyond Tamil Nadu?
AIDAT, being a new organisation and also being volunteer driven, runs like a start-up organisation where passion, vision and commitment to make a difference to the community are the driving force. Having worked in start-ups and having a start-up of my own, I bring that experience to bear in this venture. Also, having worked for a global Fortune 50 MNC in aerospace, a global perspective towards running a regional association is another aspect that is required for this to be prospering.
AIDAT is a regional organisation and is designed to serve aerospace and defence ecosystem based in Tamil Nadu. While we don’t plan to extend beyond Tamil Nadu, we want to work aggressively with organisations across the country and the globe to bring opportunities to A&D industries based in Tamil Nadu that want to grow and expand. Working with the TN government was something that we had not done before but we have had excellent support from the bureaucracy and the ministers over the years since inception.
Can you brief us on the proposed Aerospace Park that is planned near Chennai? What is the current stage of development?
The Aerospace Park is the brainchild of the TN government and AIDAT has been working with them to make it happen with the support of the industries from the A&D ecosystem. The Aeropark that is situated along the Oragadam-Sriperumbadur Industrial corridor is focused on creating a cluster approach and providing opportunities for global/domestic customers and the industries to interact in one place to leverage each other’s needs. The Aeropark is designed to be self-sufficient so that facilities for end-to-end, such as, design, analysis, manufacturing, support and skill development, are available within this special zone. It is designed to accommodate large-scale industries through the sale of large parcels of developed land and also, smaller parcels of land to medium/small scale industries.
The Aeropark has been allotted land by the SIPCOT (State Industries Promotion Corporation of Tamil Nadu), in which 250 acres has been given in phase 1 with another 350 acres earmarked for larger and medium industries to anchor at the Aeropark. TIDCO (Tamil Nadu Industrial Development Corporation) is the nodal agency that is driving the implementation of the various infrastructure and facilities under the leadership of Elangovan, Senior GM for Projects, who is holding this position in addition to being MD of TIDEL Park, another TIDCO joint venture. Over 15 companies have been allotted land to the extent of 60 acres in phase 1 and most of them will start construction within the next few months. The development of the access roads, culverts, and power/water services are being done by SIPCOT since the beginning of 2018.
According to you, what is the potential of aerospace & defence market in India? How well is the State of Tamil Nadu positioned to cater to the market requirements?
India is fast emerging as one of the top 5 defence buyers in the world and with over $150 billion worth of planned defence purchases over the next decade and a half, the global aerospace and defence manufacturers are eyeing the Indian market. Today, India imports about 70% of the defence products while DPSUs and local private companies meet 30% of its needs. The current government has set a target to reverse that over the next 10-15 years – this means the domestic manufacturing will have to grow to support that vision. Here lies the opportunity. The government is also making many policy changes to facilitate the same through the Defence Purchase Policy, Defence Production Policy, Offsets Management and many other policy tools.
The state of Tamil Nadu is traditionally known as a manufacturing powerhouse for India and is second in its contribution to the nation’s GDP. There are already over 150 small and medium scale defence and aerospace manufacturers in Tamil Nadu, who supply to ISRO, DRDO, DPSUs and some to even global manufacturers. With the announcement of the first defence corridor in Tamil Nadu, it is poised to grow the ecosystem very rapidly.
How do you look at the opportunities and challenges within the aerospace & defence industry? What role does AIDAT play to create an aerospace culture in Tamil Nadu?
The main challenge is the mindset and discipline that is required to be successful in the aerospace and defence industry. Entering this space required a long-term mindset with focus on very high quality in products/services and testing/validation as per user specifications. One needs a lot of passion to survive in this industry due to its long gestation period. Many auto companies that want to enter this space will need to recalibrate their expectations. Of course, there is a higher margin than the auto industry. For MSMEs, challenges include access to technology, testing/validation facility, bureaucratic purchasing process with the Indian government and access to funds.
AIDAT and other associations work with the government to make changes to policies that facilitate the growth in this particular sector. We work with the government in promoting
new initiatives, such as, the Chennai Aerospace Park. We also work with the Tamil Nadu government in framing the Aerospace and Defence Manufacturing Policy document. Further, we are assisting the Central government MSME department in setting up a Technology System Center in Chennai with an investment of over Rs 150 crores with a special focus on aerospace and defence sectors.
With the Govt of India’s recent policy measure introduced in Defence Procurement Procedure 2016, how does it help the A&D companies in India?
The DPP 2016 focuses on how Indian military, through the Indian government, procures products and services for its forces. We are now in almost the 10th edition of the procedure and significant changes have been made to ease the procurement and promote the local industry. The first option to buy is “Indian Designed, Developed and Manufactured – IDDM” products, which promotes design, development and manufacturing in India. This further increases the opportunities for ToT – Transfer of Technologies, collaboration with foreign OEMs, etc. Also, the offset management policies have gone for many revisions easing the way for foreign OEMs to find and partner with Indian offset partners. These policies are enablers for the A&D companies to grow and they must seize the opportunity.
What is your outlook on the future growth prospects in the aerospace and defence sector?
The Indian government has set some audacious goals – Rs 170000 crores in domestic manufacturing from current Rs 70,000 crores, Rs 30000 crores of export revenue in less than 5 years, thereby, transforming the scheme from ‘Make in India’ to ‘Made in India’. This needs to be followed up with policy environments that support the initiative. Moreover, the industry needs to be nurtured, finance access needs to be improved and defence must be seen as an industry. The time is now to take advantage of this visionary drive from the government and grow the manufacturing sector, particularly, the aerospace and defence sector, in India.