DEFENSE CONTRACTORS, INCUMBENT & NEW PRIVATE AND OTHERS
We had covered the Defense and Aerospace related discussions in several earlier blogs in details.With what is actually happening to the Indian economy on ground today, a quick review is in order.The severe twin defecits of CAD and FiscD, sliding Rupee,Mounting Short term debt to both GDP and total debt rising etc have impact on the buying power of technology products and services to the ASD sector of the country.We need to workout both short term and long term operational plans to tide over these difficulties.A good amount of pragmatism and fiscal prudence is needed to have balance between operational valour and valet.
We need to see the big picture first.Current size of the Global ASD industry is more than a Trillion Dollar and growing till 2018 at 5-6% or so. The Indian maintenance,repair,overhaul and auxiliary services market for both Mechanical/Aeronautics as well as the marine/electronics part can be easily 3-4 B$ in 2016-17. Now what we have to ensure is under the present economic conditions how we maximise the procurement through indigeneous sources-local supplies,manpower and indegenisation bypassing the impact of Re slide. The exercise will require analysis and taxonomy details of the materials and services.A close coordination will be required between Defense Contractors, Services IPC wing, inspectors and vendors associations. This can be a little complicated as different agendas can be at work.This is where for ASD sector, role of Defense Offset Authority of India can come in.Idea is to save FE in procurement and strategise reduce,reuse,repair and recycle wherever possible.
One of the way this can be done is segregate projects related to Electronics /Technology intensive programs first.Electronics is all pervasive in Radars,EW, Avionics, Communications,Electronic Security and allied gear.We can also review the Big Ticket top 20 procurement programs maturing in the ensuing fiscal. In coordination with the OEMs and offset agencies we define and outline program where we can achieve approx 10% more indigenisation than budgeted/planned earlier.This will help us stay even-keel with pre-slide Re level too.The contracts can be then awarded on fixed price basis for FY14. Longer term off course we need to go for more FDI, local investment and massive SME and MSME participation of local entrepreneurs in the sector
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