Strategic

Electronics Report
2019 by RB-IESA
Presentation at

20th September, 2019

 Message by Rajesh Ram Mishra
President, IESA

Greetings from IESA - India's premier industry body focused on Semiconductor & Electronics System
Design and Manufacturing. Today Electronics is playing a key enabler role in securing our country as well as
establishing our dominance in space. Electronics systems nearly constitute 40 percent of defence
equipment used in modern day warfare.
India's ambitious space program and modernization program of defence are going to create ~USD 193 bn
Strategic Electronics opportunity in the next 12 -14 years for our member companies.
The electronics system design community in India, one of the largest globally are working on cutting edge
technologies which have direct impact on the strategic electronics need of our country, be it design of nano
satellites, robots that can roam in moon & Mars or swarm robots for defence applications, AI enabled
intelligent electronics systems for intrusion detection, software defined radios for building secured
communication network, wearable devices for soldiers etc.
History shows that Government supported strategic electronics outsourcing has built the strong ESDM
ecosystem & global MNCs in Electronics in countries like USA and Israel.
Today we are at the inflexion point where government with its strong focus on indigenization in Defence and
Space and the matured ESDM industry can make India not only be self-sufficient in our need but also a
global leader in Strategic Electronics to address the ~USD 542 bn opportunity by 2032.
I am very pleased that IESA and Roland Berger are releasing "Strategic Electronics Report 2019" coinciding
with the Spacetronics & Deftronics event.
20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 2
 Message by Rahul Gangal
Partner, Roland Berger

Aerospace and Defence today is at the cusp of a technological revolution – characterized by battlefield
supremacy driven by electronics, data and material sciences.
Within the aforementioned trio, strategic electronics tends to have the single largest differentiated impact
as a capability multiplier. Additionally, strategic electronics has the potential to redefine the
competitiveness of India as an Aerospace and Defence manufacturing and export hub.
We at Roland Berger have had the privilege to work with some of the leading global A&D players and
without doubt, most of them, do look at India as a promising place for developing their play for strategic
electronics.
Over the last year, in partnership with IESA, we have commenced tracking India's readiness as a
location for manufacture of strategic electronics. We are happy to enclose the outcomes from first such
assessment in the form of "Strategic Electronics Report 2019" for your reading pleasure.
We would also be delighted to be of any assistance to Indian and foreign enterprises as they make their
journey in local manufacturing of strategic electronics in India. We remain available for any comments,
clarification and support you may need in your journey on the same.

20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 3

Contents Page

A. Strategic Electronics market outlook 7

B. Strategic Electronics capability assessment 24

C. Our recommendations 31

D. About Roland Berger 33

E. About IESA 35

F. Contact us 37

This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation.
It may not be passed on and/or may not be made available to third parties without prior written consent from .

© Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 4

 Executive Summary

Global Strategic electronics market is expected to grow at a CAGR of 4%

over next 12-15 years driven by technology, integration & Industry 4.0
Executive Summary (1/2)
> Strategic electronics is the primary capability driver in modern warfare
systems with value contribution being more than 40% across leading Key implications
Global platforms
market for > The global market for strategic electronics is expected to be USD 256 bn
> Global players in strategic
strategic in 2018 and estimated to grow at a CAGR of ~4% to reach ~USD 422 bn electronics market are focusing
electronics by 2032 with US occupying the largest market share on innovation and technology
based solutions thus increasing
> It is expected to be driven by a set of factors including technology,
the platform efficiency and
integration, industrial aggregation and Industry 4.0
design
> Growth in demand for electronics in Indian A&D is driven by modernization
of weapon platforms, introduction of state-of-art weapons by the three > There is a huge opportunity for
armed forces, impact of indigenization and Make in India initiative strategic electronics players in
> The demand pool is highly dispersed emanating from more than 45 India to capitalize on the
Demand individual entities operating through more than 100 institutions. It is demand created by MoD &
primarily led by Ministry of Defence, Ministry of Home Affairs & Civil
assessment Avionics
MHA over the next 10-12 years
for India SE1) > Strategic electronics market size in India is expected to be ~USD 6 bn in
market 2019 and based on already classified plans and orders across various > However the value realization
programs, it is estimated to grow at a CAGR of ~7% to reach ~USD 15 bn depends upon successful
by 2032 implementation of the proposed
> Civil avionics which has traditionally been untouched by Indian players is programs
expected to generate demand worth USD 10 bn over the next 12 years
1) Strategic Electronics
(cumulatively)
Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 5
 Executive Summary

Private sector players in India's SE market have ample opportunity to

fill the gap at tier 1/ tier 2 / tier 3 spaces in value chain
Executive Summary (2/2)

Demand > The total opportunity across electronics in programs via Ministry of Defence Key implications
assessment is estimated to be ~USD 68 bn with ~38% demand from naval electronics
for India SE1) > The total opportunity in programs via Ministry of Home Affairs is ~USD 58 > In order to become part of
market bn with ~45% of the demand from Information, Surveillance, Networks & global supply chain for A&D,
Forensics
Strategic Electronics players in
> Detailed assessment of ~320 private sector key suppliers in A&D space India need to invest in
and capabilities across DPSUs leads to the following observations: development of capabilities as
– In case of electronics, India is nearly as competitive as other low cost well as capacities across
countries platforms
– India continues to be significantly more attractive in terms of final
delivered cost vis-à-vis developed countries/regions
SE1) – Overall India's competitiveness on electronics is bettered only by
Readiness competitive on engineering and development (services)
Index
– Considering the entire value chain for SE1) manufacturing, public sector
leads the private sector across segments; however in some segments
private sector capability and capacity is catching up
> India's competitiveness is uneven across segments, and whilst there are
clear areas where India is a natural sourcing destination, there are also
segments where OEMs will have to do significant mining to grow local
champions
1) Strategic Electronics

Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 6

A. Strategic Electronics
market outlook
 A Why is electronics worth focusing on in the A&D industry?

A&D industry is seeing a major transformation vis-à-vis electronics:

value contribtn of electronics >40% across most leading platforms
Electronics and consequently delivered capability are real differentiators
Armored personnel carrier 4+ Gen fighter aircraft New-gen naval destroyer AIP Submarine

55 55 55 55
50 50 50 50
45 45 45 45
40 40 40 40
35 35 35 35
30 30 30 30
25 25 25 25
20 20 20 20
15 15 15 15
10 10 10 10
5 5 5 5
0 0 0 0
1980s 1990s 2000s 2010s 2020s 1980s 1990s 2000s 2010s 2020s 1980s 1990s 2000s 2010s 2020s 1980s 1990s 2000s 2010s 2020s
Across mobility, mission systems, Across avionics, Actuation, Across platform electronics, Across platform electronics,
protection and munitions Structures, Munitions and Engines platform management, structures, platform management, structures,
munitions and protection munitions and protectio

Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 8

 A Why is electronics worth focusing on in the A&D industry?

Electronics is also today the primary capability driver for the entire
battle value chain from situational awareness to delivery

Situational User Battlefield

Sensor Seeker
Preparedness Transparency

Criticality of
electronics

Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 9

 A Electronics in A&D industry

Strategic Electronics industry is benefitting a lot from civil electronics

businesses and vice versa

STRATEGIC ELECTRONICS MANUFACTURING

Percolation of Aerospace & Defence product testing standards into civil electronics manuf. requirements
A lot of specific technologies are originating in strategic electronics space and going into
civil electronics

There exists significant synergies between

the Civil electronics and Aerospace &
Defence electronics space

Increased usage of COTS components to drive down costs

Increased percolation of civilian supply chain methodologies into A&D
CIVIL MANUFACTURING

Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 10

 A Electronics in A&D industry

Defence electronics market is expected to grow at a CAGR of 4% to

reach USD 422 bn by 2032 (annually)
Global defence electronics market - Overview
Global defence electronics market by value
[2018 – 2032, USD bn] Distribution by geography [2018]

422 Rest of the world India

+4% Middle East
4%
4% 3-4%
304
256
Europe 24% 43% United States

23%
2018 2023 2032 Asia-Pacific
> Global threats from terrorism, migration, resource protection and > The US is currently the largest player in defence electronics market
organized crime are expected to drive the demand with major players being Northrop Grumman, Lockheed Martin,
> Military segment is expected to dominate the market followed by Raytheon, Harris, and BAE Systems
growth in public services > Asia-Pacific is also expected to grow with China taking the lead

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 11
 A Key factors impacting Strategic Electronics globally

Consolidation, supply chain integration and industry 4.0 led

disruptions are key trends influencing strategic electronics
Growth in communication Industry 4.0 has resulted
1 technology has resulted 5 in adoption of new age
in demand for networked Inter technologies including 3D
battlefield connectivity orienting, IIoT etc.
& mobility Artificial
Size, weight, Intelligence &
The trend is to reduce Power & cost Machine Development of
2 size, weight, power cons- (SWaP-C) 1 6 Autonomous platforms
Learning
umption & cost increasing has spearheaded demand
the flexibility of platform 2 8 for strategic electronics
design and utilization
Augmented
Growing
~400 deals have been Reality/ AR & VR technology's
3 executed in this space in
consoli-
dation
3 Key trends 7 Virtual 7 rapid adoption across
2018 reinforcing key to Reality industries is spurring
building technology scale growth for electronics
and scope 4 6

Strategic electronics Supply chain 5 Autonomous AI & ML led solutions are

4 primes are increasingly integration systems 8 helping to minimize
investing in vertical Impact of human interventions
integration in order to Industry 4.0 facilitating data driven
control technology bricks decision making

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 12
 A Key factors impacting Strategic Electronics globally

Interconnected networks are driving design and revolutionizing

platform electronics to serve as nodes in a larger operational cloud
Key trends in Strategic Electronics (1/8)
1 Inter-connectivity & mobility
Examples
1 Partnership between Thales and Microsoft for
Overview Benefits development of a common defence cloud solution
for armed forces enabling them to keep sensitive
data inside their own infrastructures
> Development of communication > Secure and reliable connectivity
technology has enabled > Remote visual data usage will have
networked battlefield wider applications in defence
> Increasing demand of connectivity operations
via electronic devices for remote > Strong enabler for autonomous
control, monitoring, systems
communication and operational > Development and expansion of in-
management demand capabilities NanoPAK i7 Small Form Factor computer – Its is
> Centralized battlefield 2 used in operation of an unmanned aerial vehicle
management with complete which provides networking capabilities on Army
information transparency and tactical vehicles and also hosts network services
sensor multiplication through software used by other systems on the network
seamless communication using
cloud services

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 13
 A Key factors impacting Strategic Electronics globally

There is a strong focus on smaller/lighter form factors with a view

towards making more efficient platform electronics
Key trends in Strategic Electronics (2/8)
2 SWaP-C (Size, weight, power and cost)
Examples
1 The Institute for Soldier Nanotechnologies at MIT
Overview Benefits is dedicatedly developing nanotechnology to
improve the survivability of soldiers. One of their
accomplishments is development of a hydrogel-
> The demand for miniaturization of > Miniaturization helps in savings in based wound dressing that could be equipped
electronic components has grown terms of space, weight and power with a variety of sensors, lights and drug delivery
multifold lately consumption allowing for expansion tools
> Advancement in nanotechnology flexibility
and microelectromechanical > Multi function systems helping in
systems (MEMS) have increased weight reduction leading to higher
M&M1) applications in defence payload capacity
> Several RF functions like radar, > Reduced logistics and supply costs
electronic warfare and datalink
communications through shared
active electronically scanned 2 Products like micro mirrors are used in steering
array (AESA) technology are laser beams, micro sensors & satellite
emerging communications at speeds in excess of 100 GHz

1) Miniaturization and multifunctionality

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 14
 A Key factors impacting Strategic Electronics globally

Industrial consolidation is leading to creation of much larger A&D

entities with wider array of services offered
Key trends in Strategic Electronics (3/8)
3 Growing consolidation
Examples
1 April 2019 - Acquisition of night vision business
Overview Benefits of Harris Corp. by Elbit Systems Ltd. for USD
350 m

> There were ~400 deals > Expansion of product line

announced in A&D sector in 2018 > Access to wide clientele
with electronics accounting for > Cost synergies via implementation of
41% of deal share followed by initiatives in supply chain and lean
18% contribution from software productivity
and security systems > Access to brand name and global 2 June 2019 - Acquisition of Riptide autonomous
> Financial sponsors are extremely recognition solutions, provider of unmanned underwater
active on account of attractive > Development and expansion of in- vehicle technology (UUV) by BAE Systems
lending environment and well demand capabilities
positioned assets

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 15
 A Key factors impacting Strategic Electronics globally

Electronics primes are increasingly investing in vertical integration

for ensuring control of technology bricks
Key trends in Strategic Electronics (4/8)
4 Supply chain integration
Examples
1 Lockheed Martin has announced tie-ups with
Overview Benefits three Indian startups - Terero Mobility, Sastra
Robotics, and NoPo Nano-technologies which
will integrate into its global supply chain
> Integrated supply chain is of high > Higher pricing power and flexibility
importance because defence is a > Technology control/ buying patent
sector where design know-how rights
and product quality are of prime > Access to information at all stages
importance from defining requirements,
> With an increase in customization designing contracts to operation and 2 Thales acquired Gemalto, a major player in
demand of defence products, performance management cybersecurity products for more than USD 5 bn in
supply chain integration becomes > Useful in catering to customized Apr 2019 thus giving it access to critical decision
imperative product demand chain in digital world from data generation to real-
> Tierised entities with specific time decision support
technology bricks are being
increasingly integrated by
electronics primes to ensure
greater control

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 16
 A Key factors impacting Strategic Electronics globally

Industry 4.0 led methodologies are defining the future of aerospace

manufacturing causing significant disruption to existing value chain
Key trends in Strategic Electronics (5/8)
5 Impact of Industry 4.0
Examples
1 Military Sealift Command Pilot Programme: US
Overview Benefits Navy has partnered with GE to improve two dry
cargo T-AKE class ships' mission readiness. GE will
develop a digital twin which will enable high speed
> Industry 4.0 has led to > Increase in efficiency, quality and data sampling for analyzing electrical signature of
introduction of new technologies, flexibility across stages of value critical marine equipment & provide predictive
new methods & materials, new chain analytics
business models & new profit > Improvement in production
pools capabilities
> New technologies/disruption and > Rapid design and transition
platform capabilities are needed capabilities
in context of key platform
2 Lockheed Martin has deployed interactive 3D
attributes (Mobility, Firepower,
technology by NGRAIN in order to streamline its
Survivability and Battlefield
manufacturing process of F-35 jets. This has
Transparency/Networked
resulted in optimization of maintenance time, data
platform)
accuracy and improved efficiency

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 17
 A Key factors impacting Strategic Electronics globally

Unmanned systems are expected to lead the future warfare

necessitating developments in autonomous systems and sensors
Key trends in Strategic Electronics (6/8)
6 Autonomous/ unmanned systems & platforms
Examples
1 Russia is planning to introduce a nuclear-powered
Overview Benefits autonomous air platform which can fly indefinitely
with unlimited range by 2025

> Autonomous and semi autono- > Paradigm shift in military tactics
mous systems are being necessitated by next gen warfare
developed leading to substantial > Safer military operations
investments in sensor electronics > Greater flexibility
> Investments in commercial > Unlimited life
autonomous vehicle technology > Wider military application in
has hastened the development of reconnaissance, surveillance and 'Project Overlord' by US Navy aims to deliver 10
sensors and electronics and sensing 2 large unmanned surface ships by 2020. China
narrowed the technology gap and Russia are also developing such systems
between commercial and strategic
electronics
> Optronics, Lidar and Radar
technology form the backbone of
autonomous system design

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 18
 A Key factors impacting Strategic Electronics globally

AR & VR applications in defence are transforming traditional business ways,

enabling real time simulation of complex situations & eliminating errors
Key trends in Strategic Electronics (7/8)
7 Augmented Reality / Virtual Reality
Examples
1 Use of Upskill Skylight AR by Boeing: The firm
Overview Benefits uses AR glasses by Skylight to guide technicians
in wiring applications. This has resulted in
reduction of production time by 25% and
> AR/VR enable generation of > Enables understanding of complex eliminated errors
computer-generated visuals within system architectures thereby
a simulated environment bridging the educational gap
> Growth in partnership amongst IT > Decline in maintenance lead time
and defence industry has led to with faster detection of anomalies &
better situational awareness on curation provision VR led military trainings: Virtual Reality is
the battlefield > Facilitates remote servicing / on-the- 2 increasingly used to simulate a situation,
> Concept modelling and design move repairs and at the same time, surroundings and conditions for practical purposes
simulation are two key areas helps in practicing repair of complex
where AR is helping to 'de- systems
complexify' sophisticated
technologies and also to explore
design flaws from 3D perspective

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 19
 A Key factors impacting Strategic Electronics globally

Demand for firms adopting AI solutions in their value chain is

expected to rise for its ability to learn statistically & adapt contextually
Key trends in Strategic Electronics (8/8)
8 Artificial Intelligence & Machine Learning
Examples
1 The US military has partnered with Raytheon to
Overview Benefits develop AI based predictive maintenance tool
which will tell if multi-mode radar needs repair
and maintenance or needs replacement. This will
> Artificial intelligence application in > Improvement in operations not only lead to savings in time & money but also
defence is leading to intelligent efficiency facilitate servicing requirements as and when
automation > More can be achieved with lesser needed
> It can facilitate strategic, operational resources
and tactical level of planning across > Human limitation can be improved
functions, be it entering hazardous with self creation of algorithms
zones or combat applications or para > Force multiplier coupled with
dropping superior intelligence 2 BAE Systems has developed adaptive radars and
> It will help in developing safer
is working with US Defense Advanced Research
systems, evolving from concept- Projects Agency (DARPA) to enable airborne
proof to operation-proof electronics warfare systems to counter new,
> AI solutions can also facilitate setting unknown and adaptive radars in real time
up of self-configuring networks which
could detect bugs in software &
perform corrective actions

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 20
 A Key factors influencing growth of electronics industry in Indian A&D

Growth in the demand for electronics in Indian A&D sector is driven

by three factors
Key factors influencing growth

Weapon
platforms Modernization of
weapon platforms

Impact of Indigeniz-
indigenization ation
and Make in
India initiative

State-of-art Introduction of state-

weapons of-art weapons by
the three armed
forces

Source: Industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 21
 A India demand pools for Strategic Electronics

The demand pool is highly dispersed emanating from > 45 individual

entities operating through > 100 institutions
Majority of the demand arise from the bodies under MoD and MHA
> Demand arises from 49
Ministry of Defence Ministry of Intelligence DRDO Labs, 8 DPSUs, 6
[1.5 m active, Home Affairs [Under Ministry of Civil aviation PSUs, Space
1.2 m retired personnel] [1.1 m active personnel] Home Affairs] manufacturing ecosystem
driven by ISRO and 39
Ordnance Factories
> Indian Army > Assam Rifles > Intelligence Bureau > Civil aviation aircrafts
> 45 individual entities
> Indian Navy > Special Frontier Force > Research & Analysis Wing – Narrow body (Central forces, Para-
> Indian Airforce > Border Security Force > National Technical Research – Wide body militaries and State police
> Indian Coast Guard > Central Industrial Security Organization – Turboprops forces) operating through
> JSF Force > Aviation Research Centre > >100 institutions (ministries
> Central Reserve Police Force > National Disaster – Defence & Homeland
Management Authority Security, DRDO labs,
> Indo-Tibetan Border Police PSUs, Defence PSUs)
> National Security Guard > Narcotics Control Bureau
> Demands are raised at a
> Sashastra Seema Bal > Census Survey & Statistics singular level, leading to no
> National Disaster Response > Defence Image Processing & demand aggregation
Force Analysis Centre > No coordination in planning
> Civil Defense1) > Central Forensics Science of requirements from each
Laboratory of the agencies leading to
> Home Guard2) similar products being
> Modernization of Police
> Special Protection Group Forces bought from different
manufacturers
> National Investigation Agency
> Defense Intelligence Agency

1) Civil Defense force is responsible for protecting the public and restore vital services in case of immediate emergency conditions like an attack from an outside enemy
2) The home guard is a voluntary paramilitary force that acts as an auxiliary to the Indian Police force
Source: Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 22
 A India demand pools for Strategic Electronics

The total market opportunity for strategic electronics in India is

expected to range from USD 135 to 137 bn till 2032 (cumulatively)
Strategic electronics market size in India (cumulative over next 12 years)

Ministry of Defence Ministry of Intelligence

[1.5 m active, Home Affairs [Under Ministry of Civil aviation
1.2 m retired personnel] [1.1 m active personnel] Home Affairs]
The total opportunity across The total opportunity in The total opportunity in The total opportunity in
electronics in programs via programs via Ministry of Home electronics for Intelligence electronics for civil aviation
Ministry of Defence is Affairs is sector is programs is
~USD 68 bn ~USD 40 bn ~USD 18 bn ~USD 10 bn

> Based on already classified > The demand arising from > Information, Surveillance, > Assuming India needs to buy
plans and orders, demand for Ministry of Home Affairs Networks & Forensics 700-800 aircrafts in the next 10-
strategic electronics is (except Intelligence Systems) constitute ~45% of the total 12 years, avionics market size is
distributed as under: is expected to decrease at demand from Ministry by expected to be ~USD 10 bn
– Land-systems: ~CAGR 4% till 2025 and Home Affairs > This demand is driven by
~USD 18 bn stabilize beyond that > This is driven by domestic industrial growth,
– Naval electronics: > Uri attacks has resulted in a implementation of tech-based growth of LCCs (Low Cost
~USD 26 bn reprioritization of critical infra solutions in security networks Carriers), increase in customer
– Airborne electronics: protection (a large part of segment of middle class flyers
~USD 13 bn which is electronics based and increased policy support in
– Network electronics: security) the form of removal of FDI limits
~USD 11 bn in key aviation sub-sectors

Source: Roland Berger Analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 23

B. Strategic Electronics
capability assessment
 B Strategic Electronics capability assessment

Strategic Electronics Readiness Index considers ~320 private sector

key suppliers in A&D space and capabilities across DPSUs
Consideration set – Nature of companies

~320
Companies under consideration

~270 ~20
Standalone companies Large Group Enterprises
~25
Govt. owned Enterprises
/ DPSUs1)
1) Defence Public Sector Undertakings

Source: Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 25

 B Strategic Electronics capability assessment

The identified ~320 key suppliers were then categorized basis the
product segments that they addressed
No. of companies in various segments
28 25 18 18 5 4
Fuzes &
Survei Electronic Optics & Platforms
COMS related
-llance Warfare Optronics
devices

12 7 10 6 38 2
Power Design Test Mechanical
supplies Shelters Chemicals
services chambers hardware

16 33 15 8 8 2
Materials
Software Control & Electro-
(Alloys & Fabric Tools
composites) command mechanical

7 7 7 16 2 32
Safety & Cables, Non-
Display harness &
related metallic Missiles Other
systems connectors
equip. material

Source: DRDO, BEL, HAL, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 26
 B Strategic Electronics capability assessment

India's competitiveness as a destination for sourcing vis-à-vis other

low cost countries and developed markets is strong in electronics
India Competitiveness vs. low cost countries and developed markets (like Europe)
Category Assessment Comments

Extremely -3 -2 -1 0 +1 +2 +3 Extremely
negative positive

Composites > In case of electronics, India is

nearly as competitive as other
low cost countries
Electronics > India continues to be
significantly more attractive in
terms of final delivered cost
vis-à-vis developed
Electricals countries/regions
> Overall India's competitiveness
on electronics is bettered only
Metallics by being competitive on
engineering and development
(services)
Engineering &
development (services)
Competitiveness vs Low Competitiveness vs
cost countries Europe
Source: Primary interviews, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 27
 B Strategic Electronics capability assessment

Strategic electronics space across platforms is dominated by the

government owned entities; ample opportunity for private players
Design, engineering & Tier 3 Tier 2 Tier 1 Final assembly and Post sale – lifecycle
IT incl. Training components components sub-systems System Integration support

Pub. Sector Capability Capacity Capability Capacity Capability Capacity Capability Capacity Capability Capacity Capability Capacity
Pvt. Sector Capability Capacity Capability Capacity Capability Capacity Capability Capacity Capability Capacity Capability Capacity

Land
systems –
platform
electronics
Land
systems –
Communicat
ion networks Area of Area of
greater strength,
strength, depth
Airborne depth and scale
avionics and in private
compet- sector
ence in
Marine Public
sector
platform
electronics

Munitions
electronics

Low High
Source: Company websites, industry reports, Press articles, Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 28
 B Strategic Electronics capability assessment

The private sector has some areas of competence gap – this

reflects in the ability to address sourcing needs of OEMs
Sourcing from India – Relevant sub-segment competence
Capability Capacity
Electronic/Electrical Assessment Electronic/Electrical Assessment
Low High Low High Low High Low High
Data Links Sensors
GIUs PCB
Test Beds/ATE Microwave components
Electro-optic Assemblies RF Assemblies

Electro-mech Assemblies Power electronics

PCB Assemblies Concept, Prelim & Detailed design

Master Geometry
Microwave assemblies
Virtual Prototyping
EMI/EMC Hardened Circuits Performance analysis
Ruggedized Circuits Conceptual Design
Tactical Switches Material Data Characterization

Displays Systems requirement definition

Mech. and Sys. design
Cable/Harness assm.
Detailed Design
Cable/Harness kits
Certificate and support document
Cables Configuration & change mgmt.
Fuses Software & hardware design

Source: Expert interviews, Roland Berger Research 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 29
 B Strategic Electronics capability assessment

To conclude, we observe that the evolving industry structure has led to ave-
nues for private sector to start emerging as meaningful Tier 1/Tier 2 players
Indian A&D electronics manufacturing: Evolving industry dynamics

OEM OEM
> Historical presence > Exit of DPSUs from
of Defence Public Tier 1/Tier 2 and
Sector Undertakings Congregation of
Tier 1s (DPSUs) across the DPSUs at OEM Tier 1s
value chain levels
> DPSUs created > Opening up of Tier
capacity through the 1/Tier 2/Tier 3
Tier 2 / Tier 3 Tier 2 / Tier 3
value chain, spaces for
sometimes even until homegrown Indian
the component mfg. groups to step
manufacturing level in and fill the gap
Component Component
manufacturers manufacturers

Indian A&D manufacturing Indian A&D manufacturing

until mid 2000s today

Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 30

C. Our recommendations
 C Our recommendations

Devising a strategic roadmap, a consortium led approach and

introducing standardization are some of our key recommendations

1 Consortium led approach Strategic roadmap 4

> It is imperative to note that representation of indus- > Absence of a National Security Doctrine
try stakeholders in defence value chain is limited and absence of long term defence planning
> This presents a need to look at a industry body make it difficult for private players to
led consortium approach to handle large participate in defence value chain
indegenization opportunity.
Our
2 Leverage holistic opportunity recommend- Testing infrastructure 5

> The solutions and processes designed must ations > Establishment of Electropreneur park and
look at the holistic opportunity from chips to various testing facilities in Defence
systems to solutions to achieve truely secured, production clusters are extremely
IP controlled solutions for India leveraging the welcoming initiatives by the government
large system and chip design capabilities
3 Standardization Developing local talent pool 6

> Manufacturers cannot develop global standard products > MeitY1) is providing grant-in aids to institutes like
because of absence of institutional compliance IITs, IISc, central universities and various R&D
standards within MeitY1) for electronic products organizations to conduct research in thrust areas
> Standardization will support indeginized design and > However, a closer relationship between academia
avoid vulnerability and industry is needed to improve domestic
1) Ministry of electronics and information technology capabilities
Source: Roland Berger analysis 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 32
D. About Roland Berger
 D About Roland Berger

Roland Berger is one of the top 5 global strategy consultancy firms & the only
one of European origin; working with the best of the A&D industry globally
Roland Berger Strategy Consultants – Key facts
Our A&D clients1)
Founded in 1967 in Germany by Roland Berger OEM/prime contractors

51 offices in 35 countries, with around 2,400 employees

Nearly 220 Partners currently serving over

Tier -1 players

1,000 international clients

Air defense

Broad spectrum of services based on 3 solid pillars:

Governments/institutions
Knowledge I Technology I Capital

The only strategy consultancy of European origin playing in the

top league of international consulting companies
1) This includes indicative list of clients where disclosure is possible

Source: Roland Berger 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 34

E. About IESA
 E About IESA

IESA is the premier industry body working towards development of

Indian Electronics System Design & Manufacturing ecosystem
India Electronics & Semiconductor Association (IESA) – Key facts
About IESA Objectives of IESA

India Electronics and Semiconductor Association The primary objective of IESA is to act as a catalyst for the growth of the
(IESA) is committed to the development of the ESDM industry in India
Indian Electronics System Design and
Manufacturing (ESDM) ecosystem by bringing all
stakeholders on a common platform Create global awareness for the Indian semiconductor and electronic
systems industry outside of the generic ‘IT’ umbrella
Vision Create a win-win interaction among semiconductor and electronics product
The IESA’s vision is to bring stakeholders from and services companies, government, academia, venture capitalists and
the Indian industry, government and academia industry bodies
on a common platform to work towards making Create an enabling ecosystem that catalyzes industry growth and
the Indian ESDM sector globally competent leadership
Enhance operational efficiency
Members Foster active collaboration between industry and universities to further
The member base of IESA represent a spectrum expand the available world-class semiconductor talent pool
of Large Global Corporations to Large, SME and Identify investment opportunities
Start-ups from Domestic Technology companies
in Intelligent Electronics space, including Drive technology vision for the semiconductor and electronic systems
Academic Institutions and Venture Capital firms industry
Promote trade and industry

Source: IESA 20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 36

F. Contact us
 F Contact us

For further details, please feel free to contact the authors:-

Our offices Roland Berger:

Mumbai: Rahul Gangal
804, 8th Floor, One BKC, Plot C-66, G Block, Partner – India and North America
BKC, Bandra (E), +91 8130831818, [email protected]
Mumbai, Maharashtra, 400051, India
Aditya Kumar
Gurgaon: Senior Project Manager
[email protected]
302, Building 4B, DLF Corporate Park,
MG Road, Amritpal Singh
Gurgaon, Haryana, 122002, India Project Manager
[email protected]
Bengaluru (Head Office):
Shikha Jodhani
Unit G-02, Ground Floor, Prestige Terminus-II,
Consultant
901 Civil Aviation Road,(Old HAL Airport Exit Road), [email protected]
Konena Agrahara, Bengaluru 560017, India
IESA:
New Delhi:
Electropreneur Park, 3rd Floor, Library Suriya Kala
building, University of Delhi, South Campus, Deputy General Manager – Events & Alliances
[email protected]
Benito Juarez Road, New Delhi 110021, India

20190920_Strategic Electronics Report 2019 by RB-IESA.pptx 38