th Lecture

Make in India - Aerospace & Defence,

Make in India - Aerospace & Defence

Stéphane Lauret

Chief Executive officer at Safran, India

August 21, 2018

OBJECTIVE

To provide a conceptual framework to actualise the Make in India programme by better understanding the underlying challenges especially in the acquisition of strategic technologies.

CONTEXT

The Aerospace & Defence Industry in India is vital for the country. With a strength of over 1.3 million active personnel,it is the world's 3rd largest military force. The lack of a healthy domestic industrial base means that the Indian military relies on imports, earning the dubious distinction of being the world's largest arms importer.

The lack of a sizeable domestic defence industry is accompanied by a mixed track record in defence modernisation,resulting in the Indian Armed Forces not receiving the necessary military equipment to match India's global aspirations.

The armed forces are highly professional and attuned to global developments, but they lack policy influence. The dearth of expertise often results in a parochial view of defence sector.

While modernising India's aging military equipment is essential, decision-makers need to realise that building capable, technologically competitive armed forces is more than just purchasing or developing modern technology. Modernisation entails the development of institutions and personnel capable of efficiently managing resources and thinking strategically.

The quest will remain incomplete unless Indian decision-makers overcome this in-built bureaucratic inertia.

With a budget allocation of $55.9 billion to the Ministry of Defence, India is the world's 5th largest spender on defence. Between 2012 and 2016, the country accounted for 14% of all global arms exports making India the world's largest arms importer. This is likely to change with the Government's target to step up local sourcing to 70% and in turn reduce the defence budget by 50%.

India's Aerospace manufacturing stands at $250 million, compared to the $100 billion global market. However, the outlook for the Aerospace and Defence Industry in India is positive and expected to reach $70 billion by 2029, according to a joint report by IESA, Nasscom and Roland Berger.

With a value of about $16 billion, the Indian civil aviation market is also one of the fastest growing in the world with travellers increasing at 20% every year. There are enormous opportunities for foreign investments and many global Aerospace and Defence companies are looking at India as a potential low-cost manufacturing destination and a high potential market.

INITIAL THOUGHTS

  • What are the key challenges to actualize the Make in India program in defence and aerospace sector.
  • How would we address the need for a very high order of investment that is required for investment in plant, tooling, infrastructure and human resources.
  • How does the industry access higher skill sets in diverse areas required to make and integrate complex platforms.
  • How would we acquire strategic technologies that is required to help Indian companies build domestic capability.

EXPERT

Stéphane Lauret started his career in USA in 1994 and then moved to France, in the International Department of a construction company. He took charge of Safran India as Chief Executive Officer in January 2013. Prior to India operations assignment, he was CEO of Safran Mexico since 2008. He joined Safran International Development in 2007, as Director for Latin America. In 2003, he was appointed Director of the SAGEM subsidiary in Brazil after joining SAGEM Communication in 2000 to lead the expansion of the company in the Americas. Stéphane Lauret has been steering the Safran Group to become an integral partner in India's growth and development in the aerospace, defence, and security industries. His main experience today lies in leading the development and growth of high technology companies in emerging economies like India.