Globalization of R&D is here to stay, with India, Western Europe, and North America accounting for almost 75% of the global R&D engineering services market. The Indian defense and aerospace sector can benefit from this trend by indigenously designing, developing, and manufacturing products.
Currently, India imports 60 percent of its defense equipment and spends tens of billions of dollars on purchasing and maintaining them. The Indian government has set a goal to increase domestic procurement of defense equipment to 70% in the next five years. For this, the government has put forward its Make in India policy that supports the indigenous design, development, and production of defense equipment.
By leveraging the many benefits provided under this policy in the form of tax benefits, trade protections, and industrial licensing exemptions, organizations can create a more vibrant domestic aerospace and defense sector. One of the important ways of boosting innovations in the sector is to manage the transfer of technology and work effectively. Combine this with India’s labor cost, available skill sets, and domain proficiency; organizations could reap cost benefits that can put them in the global map as world-class players.
Here’s how the transfer of technology will drive changes in the industry:
Boost design and manufacturing: With an increase in FDI in the sector, foreign OEMs will have to adhere to certain requirements that will promote the indigenous manufacturing and designing industry for aerospace and defense. This will also expose domestic suppliers and manufacturers to foreign technology, processes, and best practices. With the government provisioning to fund R&D up to 90%, these manufacturers can manage the transfer of technology to drive their R&D initiatives and build new products that are more suitable for the domestic market.
Improve maintenance, repair, and overhaul (MRO) facilities: The policy requires OEMs to transfer technology for maintenance of parts to Indian Industry partners. The policy also offers tax benefits to Indian firms for setting up MRO facilities in the country. Currently, 90% of India’s MRO expenditure is made outside India, mostly to Singapore, Sri Lanka, and more. With India’s current fleet size expected to double up by 2020, MRO industry will be a huge opportunity for domestic players in the market.
Enhance supply chain operations: OEMs are required to partner or source 30% of the total value of products from Indian manufacturers. This offset policy will promote the growth of an eco-system of suppliers domestically and further drive innovations in the space.
Organizations by partnering and collaborating with the right technology service partner can deliver unprecedented results and derive great profits. Your technology service partner should have:
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