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Last updated: 27 Sep, 2014  

defenceprocurement.thmb.jpg 'SMEs not enjoyed benefits of defence offsets, govt support'

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SME Times News Bureau
The small and medium enterprises (SMEs) have not enjoyed the benefits of defence offsets and government support, Director, Centre for Air Power Studies (CAPS) and (retd.) Air Marshal, Vinod Patney said Wednesday.

"SMEs have not enjoyed the benefits of defence offsets and government support. Therefore, SMEs should get due attention from the government as well as large-scale companies," Patney said at an event organized by industry body CII and CAPS in association with the Indian Air Force in New Delhi on Wednesday.

"The business model must undergo change. The FDI limit should be relaxed and private sector's greater involvement is required," Air Marshal Patney added.

He said India could not become a major power without a flourishing aerospace industry.

Satish Kaura, chairman of Samtel Group and co-chairman of CII National Committee on Defence and Aerospace, said there was a need to have an effective mechanism for transfer of technology in place.

"We will have to focus on capacity building with the aim of emerging as a defence and aerospace export hub."

"We will have to make sure that Indian SMEs should become a part of the global supply chains of major defence equipment producers by leveraging the cost arbitrage in component designing and manufacturing in India," Kaura said.

The Indian Air Force will procure USD 150 billion worth of equipment and platforms in the next 15 years.

Giving this bit of information, Air Marshal P.P. Reddy, director general, inspection and safety, has said the Indian industry requires tax holidays and a more friendly import and export regime.

Research and Develpment funds should also be made available to the private sector companies, Air Marshal Reddy said while speaking at the inaugural session of 8th International Conference on Energising Indian Aerospace Industry.

Aircraft, engines and equipment absorb the major chunk of the air force's capital budget.

S.K. Mittal, general manager, business development, Hindustan Aeronautics Limited, said the best of the aerospace technologies have to developed.

Most of the raw material is being imported and this trend needs to be reversed. Certification of airworthiness was also a challenge, he added.

Anjan Das, executive director, CII, said the R&D component, as per the government's definition, constituted a negligible portion of the overall spending on product development, testing, trials, pre-commercial production of Indian companies.

"The tax rebate needs to be more broad-based and should also cover cost involved beyond research as well. All the stakeholders should give more priority to aerospace and defence R&D and manufacturing as an integrated piece to ensure orders to industry that puts money in R&D."

Global partnerships in co-development and co-manufacturing will be the key, Das added.
 
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